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Bluebook 21st ed.

Meghna Banerjee & Yajnaseni Roy, Patentability of Incremental Innovation vis-a-vis
Section 3(d) of the Indian Patents Act: Striking a Balance, 2 NUJS L. REV. 607
(2009).

ALWD 7th ed.

Meghna Banerjee & Yajnaseni Roy, Patentability of Incremental Innovation vis-a-vis
Section 3(d) of the Indian Patents Act: Striking a Balance, 2 NUJS L. Rev. 607
(2009).

APA 7th ed.

Banerjee, Meghna, & Roy, Yajnaseni. (2009). Patentability of incremental innovation
vis-a-vis section 3(d) of the indian patents act: striking balance. NUJS Law Review,
2(4), 607-636.

Chicago 17th ed.

Meghna Banerjee; Yajnaseni Roy, "Patentability of Incremental Innovation vis-a-vis
Section 3(d) of the Indian Patents Act: Striking a Balance," NUJS Law Review 2, no. 4
(October-December 2009): 607-636

McGill Guide 9th ed.

Meghna Banerjee & Yajnaseni Roy, "Patentability of Incremental Innovation vis-a-vis
Section 3(d) of the Indian Patents Act: Striking a Balance" (2009) 2:4 NUJS L Rev
607.

AGLC 4th ed.

Meghna Banerjee and Yajnaseni Roy, 'Patentability of Incremental Innovation vis-a-vis
Section 3(d) of the Indian Patents Act: Striking a Balance' (2009) 2(4) NUJS Law
Review 607

MLA 9th ed.

Banerjee, Meghna, and Yajnaseni Roy. "Patentability of Incremental Innovation
vis-a-vis Section 3(d) of the Indian Patents Act: Striking a Balance." NUJS Law
Review, vol. 2, no. 4, October-December 2009, pp. 607-636. HeinOnline.

OSCOLA 4th ed.

Meghna Banerjee & Yajnaseni Roy, 'Patentability of Incremental Innovation vis-a-vis
Section 3(d) of the Indian Patents Act: Striking a Balance' (2009) 2 NUJS L Rev 607
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 PATENTABILITY OF INCREMENTAL
INNOVATION VIS-A-VIS § 3(D) OF THE
INDIAN PATENTS ACT: STRIKINGA
BALANCE
Meghna Banerjee & Yajnaseni Roy

The strict standards of patentability envisaged by

TRIPS posed a challenge to India 's pharmaceutical
industries, whose success depended on the ability to
produce generic drugs at much cheaper prices than
their patented counterparts.A robust patent system
would severely curtail access to expensive life saving
drugs. Therefore, although India amended the Indian
Patent Act, 1970 to protect genuine innovations, it did
not extend protection to "incremental innovation" on
existing medicines unless such innovation significantly
increasedthe efficacy of the original drug. This article
explores the prevailing tension between § 3(d) of the
Indian Patent Act, 1970 which excludes "incremental
innovation" from patent protection, and
pharmaceuticalcompanies pressingfor the recognition
of the same. Firstly, the article examines the specific
reasons behind excluding "incremental innovation"
from § 3(d). Secondly, it distinguishes between "ever-
greening" and "incremental innovation" and argue
that the latter is vital for development of new medicine
and thus deserves patent protection. Thirdly, it
highlights the ambiguity in the language of § 3(d) and
enumerates the changes which are necessary to make
the provision workable. In this respect, two recent
judgments, namely Novartis AG v. Union of India and
E Hoffman-La Roche v. Cipla are analyzed, in light
of the impact of this provision on the pharmaceutical
sector. It concludes by emphasizing on the need to
strike a balance between two seemingly conflicting
interests: generalpublic interest sought to be protected

* 4' and 21 Year students respectively, W.B. National University of Juridical Sciences, Kolkata.

October - December, 2009

 NUJS LAW REVIEW 2 NUJS L. REV.607 (2009)

by § 3(d) and the incentivefor research and innovation

which necessitates protection of "incremental
innovation ".

I. INTRODUCTION

The Indian Patents Act, 1970 was enacted to replace the Indian Designs
and Patents Act, 1911, which had governed the patent system in India during the
British era. The Act was based on the recommendations of the Ayyangar Committee.
The recommendations highlighted the need for a patent regime that would
encourage development of the domestic pharmaceutical industry and make life-
saving drugs affordable for common people.' The Act marked a paradigm shift
from the British-imposed patent laws that favoured foreign inventors at the cost
of the indigenous drug manufacturers. Under the colonial rule, multinational
corporations (MNCs) exploited the patent system to gain monopolistic control
over the Indian drug market and blocked indigenous manufacturers from producing
cheaper drugs. In spite of being one of the poorest countries in the world, India
had to import life-saving drugs like penicillin from abroad and then sell them at
prices which were often much higher than those in developed countries.2
Therefore, the need of the hour was to reduce the dependence on MNCs and
protect public health by making drugs accessible to people.

India was able to achieve both these objectives through the Indian
Patents Act, 1970. It abolished patents in pharmaceutical products and provided
patents on processes for a short period of time. This gave a rapid boost to the
domestic generic drug manufacturing companies which produced cheaper versions
of the patented drugs by using "reverse engineering" 3 and sold them at lower
prices to the Indian population. Thus, the Indian companies were able to effectively
compete with MNCs. By 1990s, they controlled seventy percent of the domestic
formulations and eighty five percent of the bulk drug market.'

N.R. Ayyangar Committee Report on the Revision of Patents Law (1959) as cited in
Shamnad Basheer, India's Tryst with TRIPS: The Patents (Amendment) Act 2005, 1 INDIAN
J.L. & TECH. 15 (2005) available at http://www.nls.ac.in/students/IJLT/resources/
I Indian JL&Tech 15.pdf (Last visited on August 1, 2009).
2 Linda Lee, Trials and TRIPS-ulations: India Patent Law and Novartis AG v. Union of
India, 23 BERKELEY TECH. L.J. 281 (2008).
3 Reverse Engineering refers to the process by which an existing system is analysed for
identifying its components and their interrelationships so as to create representations of
that system in another form or at a higher level of abstraction. Reverse engineering
usually redesigns the system to make it more maintainable or to produce a copy of a
system without access to the design from which it was originally produced.
Martin J. Adelman & Sonia Baldia, Prospects and Limits of the Patent Provision in the
TRIPS Agreement: The Case of India, 9 VAND J. TRANSNAT'L L. 507 (1996).

October - December, 2009

 PATENTABILITY OF INCREMENTAL INNOVATION

In 1995, when India decided to join the WTO, it was brought to

pressure by the western countries to bring its patent law in conformity with the
standards enumerated in the TRIPS. However, India being a developing country,
was given additional time to bring about the necessary changes in its domestic
law. Moreover, since it did not have patent protection on pharmaceutical
products, TRIPS gave it a 10 year time frame to extend protection to
pharmaceuticals. 5 However, during the transitional period India was expected
to set up a6 system for filing patent applications in pharmaceuticals by way of
"mailbox" provision. The "mailbox" would be opened and examined only on or
after January 1, 2005, by which time the Indian Patents Act, 1970 was expected
to become TRIPS-compliant. In addition, it had to grant Exclusive Marketing
Rights (EMRs) 7 for pharmaceutical products possessing marketing approval in
India and abroad, which were patented in other countries and in respect of
which patent application was pending in the Indian Patent Office.' Accordingly,
India amended its laws to incorporate these interim measures in 1999. Finally,
the Patent (Amendment) Act, 2005 introduced patent protection for
pharmaceutical products and thus a TRIPS compliant patent regime came into
existence.

Even though the scope of patent protection was expanded, India was
unwilling to threaten its highly developed generic industry by making the Indian
Patents Act, 1970 too patent- friendly. § 3 restricts the scope of subject matter
eligible for patentability by listing out what are not "inventions" within the ambit
of Indian PatentsAct. § 3(d) specifically disallows patents forthe mere discovery
of a new form of a known substance unless such form demonstrates significant
efficacy over the original substance. In effect, this provision excludes from its

5 Vijay Yalamanchili, State of India's Trips compliant Patent Regime, 26 BIOTECHNOLOGY L.

REP. 211 (2007).
6 TRIPS Agreement, Article 70.9 required India "to provide as from the date of entry into
force of the WTO Agreement a means by which applications for patents for such inventions
can be filed..." Thus, India had to come up with 'mailbox' facility where all the patent
applications for pharmaceutical products filed during the transition period had to accepted
and put away to be examined in 2005. Each application had to be provided with a filing
date. This system is known as 'pipeline protection'.
7 EMR is a quasi-patent right granted in anticipation of a patent. Article 70.9 of TRIPS
provides that certain mailbox applications which met the criteria specified therein would
have to grant EMR during the transition period. Accordingly, § 24B(1) of the Indian
Patents Act was amended in 1999 to provide for EMR. It states that the duration of the
EMR shall be 5 years from the date of EMR grant or till the date of grant of a patent or
the date of rejection of the patent, whichever is earlier. The chapter on EMRs and
consequently § 24(B) was repealed by the Patent (Amendment) Act, 2005.
8 Janice, M. Mueller, The Tiger Awakens: The Tumultuous Transformation of India s Patent
System and Rise of Indian PharmaceuticalInnovation, 68 U. PITT. L. REV. 491 (2007).
9 Incremental innovation occurs when technical modifications are made to an existing
product, process, or system, which results in improvement or enhancement of that product,
process, or system.

October - December, 2009

 NUJS LAW REVIEW 2 NUJS L. REV.607 (2009)

purview most kinds of "incremental innovation".9 The exclusion is based on the

rationale that providing protection to such innovations promotes evergreening"
and harms long term public interest. In this article, we will explore the prevailing
tension between § 3(d) and the pharmaceutical companies pressing for recognition
of incremental innovation. Part A will examine the reasons why the Indian
Government chose to have a unique provision like § 3(d) in the Indian Patents
Act. This part will also attempt to determine the importance of this provision in
the protection of public health. Part B will distinguish between evergreening and
incremental innovation and demonstrate that "incremental innovations" can be
vital for development of new pharmaceutical drugs and excluding them from
patentability would be detrimental to the greater public interest. Part C will attempt
to analyse the inherent ambiguities in this provision which makes it problematic.
It will critically examine NovartisAG v. Union of India' and F Hoffman-La Roche
v. Ciplal2 in context of interpretation of § 3(d). This part would also discuss the
various changes that need to be introduced in order to make this provision more
objective and eliminate the uncertainties created by its ambiguous language.
Part D would argue that in spite of the problems surrounding § 3(d), doing away
with it wholly is not a favourable option for India, given the fact that the ultimate
aim of the provision is to weed out frivolous patents and recognize genuine
innovations. Although other WTO countries like USA do not have a specific
provision like § 3(d) of Indian Patents Act, 1970, they have a number of indirect
ways to limit the grant of patent for insubstantial modifications of known drugs.
If the provision is properly amended to provide concrete guidelines for determining
the patentability, (so that valuable incremental innovations are not neglected) it
would be possible to strike a balance between the interests of the inventors and
the general public. Finally the article will conclude by reiterating that a clearer and
more specific wording of § 3(d) would ensure that India remains true to its
commitment of filtering out undeserving pharmaceutical inventions while giving
due recognition to meritorious innovations in the field of medical science.

A. THE NEED FOR § 3(D) IN THE INDIAN PATENT SYSTEM

Although the Patents (Amendment) Act, 2005 significantly expanded

the scope of patentability by allowing patents for both processes and products,
it wanted to provide a mechanism to weed out undeserving patents. It was with
this rationale that § 3(d) was amended to its present form. This section discusses
subject matter not eligible for patent protection, in context of new forms or new
use of known substances. § 3(d) as amended by the Patents (Amendment) Act,
2005 reads as follows:

l0 Evergreening occurs when a manufacturer 'stockpiles' patent protection by obtaining

separate 20-year patents on multiple attributes to a single product. See Shamnad Basheer
& T. Prashant Reddy, The "Efficacy" of Indian Patent Law: Ironing out the Creases in
3(d), SCRIPTED, Volume 5, Issue 2, August 2008, available athttp://www.law.ed.ac.uk/ahrc/
script-ed/vol5-2/basheer.asp. (Last visited on September 7, 2009).
1 (2007) 4 MLJ 115.
12 2008 (37) PTC 71 (Del).

October - December, 2009

 PATENTABILITY OF INCREMENTAL INNOVATION

"The mere discovery of a new form of a known substance which

does not result in the enhancement of the known 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 known 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, § 3(d) does not allow patent protection for the discovery
of any new form of known substance unless it enhances the efficacy of the
original substance. It also acts as a bar on new-use patents by stipulating that
mere discovery of any new property or new use of a known substance would not
be patentable. Further, the explanation to this section expressly states that salts,
esters, ethers and other derivates of a known substance would be considered to
be the same as the original substance (and thereby non-patentable) unless these
derivatives are significantly different in terms of efficacy. Thus, the provision
aims to restrict the scope of patent protection in pharmaceuticals by excluding
incremental innovation which does not meet the criteria of enhanced efficacy.

More specifically, § 3(d) aims to prevent evergreening, a process by

which a company introduces minor modifications in the patented product by way
of "incremental innovation" and then gets a new patent for its product on the
strength of the alterations made. By acquiring secondary patents over related or
derivative technologies, these companies can extend the life of the patent.' 3 For
instance, patents can be obtained for novel uses of a known drug or new methods
of administration or production, reduced dosage formulations, or new versions of
the active compound of combinations that produce fewer side effects than the
original drugs.14 Typically the patentees apply for protection prior to the date of
expiry of the original patent and get additional twenty-year patents on different
attributes of the same drug. As a result of this, the entry of the generic industry
into the market is delayed. This allows the patent holders to enjoy a lengthier
monopoly over the drugs and profit from their R&D investment.'

This practice of evergreening has anti-competitive effects as it enables

the pharmaceutical MNCs to eliminate competition from the generic manufacturers

Adarsh Ramanulan & Ralarshi Sen, Pruning the Evergreen Tree: § 3(d) of the Indian
Patents Act, 1970, 31 3) E.I.P.R. 135, 135-146 (2009).
14 Id.
15 Benjamin N. Roin, Unpatentable Drugs and the Standards of Patentability, 87 TEX. L. REV.
503 (2009).

October - December, 2009

 NUJS LAW REVIEW 2 NUJS L. REv.607 (2009)

and charge exorbitant prices for their patented drugs over a prolonged period of
time. Generic companies have no option but to wait till the patent period expires
before they start manufacturing cheaper versions of the patented drugs or negotiate
with the patent holders on commercial terms for getting access to the subject
matter of patent.16 In both ways, it takes a long time before they can start
manufacturing the generic version. This not only hampers technological progress
but is also detrimental to public interest since many essential drugs become
inaccessible to the general public on account of prohibitive pricing.

It was India's concern for public health issues that compelled it to

exclude pharmaceutical patents from Patents Act, 1970. The lack of patent
protection had ensured that Indian companies could access all the latest drugs
developed in the international market, re-engineer them through new processes
and sell them in the domestic market.17 As a result, India emerged as one of the top
ten producers of generic pharmaceutical products in the world. 8 In fact, by early
2005, Indian drugs were providing treatment to half the HIV infected people in the
developing countries. 9 Furthermore, generic manufacturers like Cipla and Ranbaxy
Laboratory had significantly assisted in driving down the prices of annual
antiretroviral treatment from $15,000 per patient to $200 within less than a decade."z
From the above discussion it is obvious that patent evergreening poses a serious
threat to cheap medical facilities.

After India introduced product patents for pharmaceuticals in the

Patents Ordinance of 2004 (hereinafter the Ordinance), it was feared that there
would be a sharp increase in the price of life-saving drugs which would take them
beyond the reach of the common man. z" There was also a growing feeling among
the generic drug manufacturers in India that the Ordinance was unduly tilted in
favour of the multinational pharmaceutical corporations which would jeopardize
their position in the global pharmaceutical market.2 2 The political parties, too, were
divided over the issue of pharmaceutical patents with the Left threatening to
oppose the Bill if it did not adopt strong measures to prevent evergreening z3

Radhika Bhattacharya, Are Developing Countries going too Jar on TRIPS? A closer look
at the Laws in India, 34 AM. J.L. & MED. 395 (2008).
Supra note 4.
Sv
18 Id.
1 Randeep Ramesh, Cheap Indian Drugs under Threat, THE GUARDIAN, (U.K) March 23,
2005, available at http://www.guardian.co.uk/world/2005/mar/23/india.aidsl (Last visited
on September 2, 2009).
20 Id.
21 Id.
22 Supra note 16.

21 Mueller, supra note 8; During the Parliamentary debates, Lok Sabha member Shri Suresh
Kurup had regarded amendment to § 3(d) to be vital if pharmaceutical companies were to
be prevented from obtaining multiple patents on the same medicine. See Transcript of
Lok Sabha Debates, March 22, 2005 available at http://164.100.47.132/textofdebates/
15/11/030809.pdf. (Last visited on August 29, 2009).

October - December, 2009

 PATENTABILITY OF INCREMENTAL INNOVATION

Under these circumstances, the Indian government was reluctant to provide for
unrestricted patent protection that would substantially harm its indigenous generic
drug companies and create public health issues. By incorporating the enhanced
efficacy requirement in § 3(d), it sought to allay the fear regarding patent
evergreening through incremental innovation and at the same time implemented
its obligations under TRIPS.

It is believed that out of 9,000 patent applications waiting to be

reviewed by the Indian Patent Office, approximately three-fourths are for
modifications of existing drugs.24 In the absence of a provision like § 3(d), a
majority of the newly discovered uses or altered forms of patented medicines
would become patentable, thereby creating a difficult situation for developing
countries that are waiting for patents on drugs to expire so that they can purchase
the cheaper, generic versions.25 Therefore, when the pharmaceutical giant Novartis
challenged the constitutionality of § 3(d) on being refused patent for its anti-
cancer drug Glivec (which allegedly did not meet the criteria of enhanced efficacy
in § 3(d)), nearly half a million people all over the world voiced their concern on
the impact which the decision would have on the developing world if the Court
decided in favour of Novartis.26 Although the decision did not lay down any
standard for differentiating incremental innovation from evergreening, by
upholding the constitutionality of § 3(d), the Court prevented exacerbation of
evergreening which would have severely affected India 27and other developing
countries relying on imports from Indian generic industry.

Many proponents of § 3(d) also argue that providing patent protection

to incremental innovation freely would lead to the thinning of the already fine line
between evergreening and valuable incremental innovations. This, in turn, would
present a tempting option to pharmaceutical companies to focus only on improving
or modifying existing drugs since they are low-risk and high-reward ventures.28
This would discourage the development of new molecules that may lead to major
technological breakthroughs, but require risky and time-consuming R&D efforts.2 9
However, this concern is not very well founded upon as it assumes that all drug
companies are similar in their objectives. It is only those manufacturers whose
primary aim is to enhance short-term profits by making trivial modifications to

11 Sara Beth Myers, Healthy Solution for Patients and Patents: Howt Indias legal victory
Against Pharmaceutical giant reconciles Human Rights with Intellectual Property, 10
VAND. J. ENT. & TECH. L. 763 (2008).
25 Id.

11 Medicines Sans Frontiers, Press release, Indian Court Ruling in Novartis Case Protects
India as the "Pharmacy of the Developing World" (August, 6, 2007) available at http:/
www.accessmed-msf.org/media-room/press-releases./ (Last visited on August 29, 2009).
2 IId.
21 Amit Bhaskar, Rethinking § 3(d) in light of Novartis judgment, available at hnp://
www.indlawnews.com/display.aspx?3793 (Last visited on August 29, 2009).
29 Id.

October - December, 2009

 NUJS LAW REVIEW 2 NUJS L. REv.607 (2009)

existing drugs which might move away from new drug development. Companies
coming up with truly inventive incremental innovations would actually use them
as stepping stones for developing novel drugs.

B. IMPORTANCE OFPROTECTING INCREMENTAL

INNOVATION

1. Radical Innovation v. Incremental Innovation

The term innovation which broadly refers to the development of new

ideas, methods or products, is divided into two categories, namely radical and
incremental innovation. While the former refers to a whole new class of medicines,
with a new mechanism of action,"0 the latter includes new drugs in an already
existing class which have a similar mechanism of action as the first-in-class, but
differ in features such as, therapeutic profile, metabolism, adverse effects, dosing
schedules, delivery systems, etc.3 While radical innovation is uniformly protected
in all patent regimes, incremental innovation is generally regarded not worthy of
protection because of the prevailing notion that they represent nothing more
than copies of existing molecules.3 2 Critics of incremental innovation, who refer to
the class of drugs developed through incremental innovation as "me-too"33 drugs,
argue that the manufacturers of such drugs only aim to maximize profits and do
not undertake any substantial research for their creation." 4

The rationale behind the differential treatment of radical and incremental

innovations is fundamentally flawed. More often than not, they are interrelated
and depend on one another. Radical innovations in the form of "blockbuster
drugs" 3 often result from hundreds and thousands of smaller improvements carried
out on an existing class of molecules over a long span of time. Moreover,
incremental innovation increases the number of drugs within a specific class and
makes them safer, more efficacious and better suited to individual patient profiles
than the original drug.6 The National Research Council had pointed out that "the

GlaxoSmithKline, Incremental Innovation, January 2008, available at http://www.gsk.com/

policies/GSK-public-policy-on-incremental-innovation.pdf (Last visited on August 29, 2009).
Id.
Albert I. Wertheimer & Thomas M. Santella, Pharmcoevolution: The Benefits of Incremental
Innovation, (IPN Working Papers on Intellectual Property, Innovation and Health, 2005),
available at http://www.policynetwork.net/uploaded/pdf Pharmacoevolution.pdf (Last
visited on September 6, 2009).
3 "Me-too" drugs refer to drugs which belong to the same chemical class and target the same
medical conditions as other drugs already on the market. Critics claim that they add little
or no therapeutic value and pharmaceutical companies only manufacture them to enhance
their profits at the cost of the customers. See Id.
Supra note 32.
35 Blockbuster drugs refer to drugs which are the product of radical innovation and are the first
in a new class of drugs having a particular mechanism of action.
36 Supra note 32.

October - December, 2009

 PATENTABILITY OF INCREMENTAL INNOVATION

cumulative effect of numerous minor incremental innovations can sometimes be

more transforming and have more economic impact than a few radical innovations
or 'technological breakthroughs". 7

Contrary to the popular perception, "me-too" drugs are not copies of

existing molecules. Even though their molecular structure is similar to already
known drugs and they target the same type of medical conditions,38they typically
represent medical advancement over the known drugs. Therefore, one cannot
assume that their development does not require any R&D efforts or creativity.
Any manufacturer trying to improve upon an existing drug is likely to expend
considerable time and money in order to ensure that he/she can emerge as the
market leader in that specific class of drugs. 9 Further, incremental innovation
assists in the development of "blockbuster drugs". Developing an entirely new
class of drugs is a long and arduous process involving huge investment with no
certainty of success. Incremental innovation enables companies to generate
revenue by improving existing drugs and this in turn, help support massive R&D
investment required for new drugs.4" Thus, excluding incremental innovation from
patent protection would kill the incentive to improve existing drugs and thus
reduce the financial resources for new drug discovery.

2. Evergreening v. Incremental Innovation

Although it is important to protect newly discovered uses and

improved versions of existing drugs which benefit patients, it is important to
differentiate between evergreening and incremental innovation. While the latter
has huge potential for the development of drugs with superior health benefits,
the former is a strategy adopted by pharmaceutical companies to prevent their
patents from expiring. Pharmaceuticals indulge in evergreening with the sole
aim to prevent losing out market shares to the generic versions of its patented
drug.4' The changes made may add little therapeutic or clinical value to the
original patented product, but the company is able to enjoy continued patent
protection. On the other hand, patents on incremental innovation seek to protect
discoveries relating to the new uses, active principles, molecules or compounds
that have been previously patented.42

National Research Council, Prospectusfor National Knowledge Assessment (1996) as cited

in supra note 32.
Supra note 32.
9 Id.
Commission on Intellectual Property, The Importance of Incremental Innovation for
Development (International Chamber of Commerce Issues Paper, 2005) available at
http://www.theworldbusinessorganisation.org/uploadedFiles/ICC/policy/intellectual
property/pages/Incremental Innovation submission to WHO CIPIH 27May05.pdf
(Last visited on September 2, 2009).
Supra note 32.
Supra note 24.

October - December, 2009

 NUJS LAW REVIEW 2 NUJS L. REv.607 (2009)

It is undisputed that in some cases, evergreening and incremental

innovation might overlap. Nonetheless, the differences are very real and any
attempt to categorise the constructive process of incremental innovation with
evergreening may be unfair to those who are striving to develop more effective
treatment options through incremental advances.

3. Benefits of Incremental Innovation and feasibility of the Indian Approach.

As discussed earlier, modifications to existing drugs are often looked

upon as innovations of little value. This view overlooks the fact that these changes
may greatly improve the quality of life of patients. "Blockbuster drugs" often
exhibit side effects and other limitations which need to be improved upon to make
the drugs safer and more effective. Incremental innovations commonly appear in
the form of new dosage formulations (once-daily formulations), or delivery systems
(e.g. time release delivery for existing drug) which can reduce side effects and
prevent toxicity as well as add to the efficacy and convenience of the older drug.43
For instance, efforts are being made to develop oral and inhalable forms of insulin
drug because of the difficulties in administering insulin injections to small children
and old and frail people.44 This is an incremental advance over injection based
treatment which would prove to be highly beneficial for diabetics. Incremental
innovation also encourages patient specific treatment .By increasing the number
of drugs available in a given class, it causes greater drug selectivity.45 Since
different patients would show different responses to various forms of the drug
within a specific therapeutic class, this allows physicians to calibrate their
prescriptions to address the specific needs of the patients.46

In India, patent protection is accorded primarily to "New Chemical

Entities".47 In order to get a patent in India, the patentee would have to show that
his/her invention is in respect of patentable subject matter and satisfies the criteria
of patentability set out in the Act. The claimed invention must be novel, involve
an inventive step and should be capable of industrial application.48 An incremental

11 US India Business Council, The Value of Incremental PharmaceuticalInnovation: Benefits

for Indian Patients and Indian Business June, 2009, available at http://
www. ahe althyindia.org/NR/rdonlyre s/e dq7 axj 5zukil3 III
37sy7ulswpiz4r7xt6ktixqqjjanixt3xummbg6xcq4ffgye25jirgu53segs7y4fbistcxyob/
USIBClncrementallnnovationReportFinal.pdf. (Last visited on September 2, 2009).
44 Id.
45 Id
41 Supra note 32.
47 According to the United States (US) Food and Drug Administration (FDA), new chemical
entity (NCE) means a drug that contains no active moiety that has been approved by FDA
in any other application submitted under § 505(b) of the Federal Food, Drug, and Cosmetic
Act. In essence, new chemical entity means a drug which is first of its class.
41 The Indian Patents Act, 1970, § 2(1)(j) defines invention as "a new product or a process
involving an inventive step and capable of industrial application."

October - December, 2009

 PATENTABILITY OF INCREMENTAL INNOVATION

innovation may satisfy all the three criteria of patentability, i.e., it could be truly
inventive but would still be unable to cross the threshold set out by § 3(d) which
lays down a category of non-patentable subject matter. By reducing the scope of
patentability to only new forms of known substances which enhance the efficacy
of that substance and derivatives of known substances that significantly differ in
properties with respect to efficacy, § 3(d) excludes majority of useful pharmaceutical
innovations. As discussed later in the article, the terms "efficacy" and
"significantly" are neither defined in the Act, nor are any guidelines provided to
that effect. Thus, drug manufacturers have no way of knowing what is the standard
required for an incremental innovation to be patentable. In Novartis AG v. Union
of India,49 the term "efficacy" was narrowly interpreted to mean "therapeutic"
efficacy which implies that any other innovation like reduced dosage patterns or
new formulations would not be patentable." Furthermore, in the initial stages of
drug development, pharmaceutical companies find it difficult to exhibit data to
demonstrate the therapeutic efficacy of the new form or new use as stipulated by
the provision.5 Thus, it is clear that § 3(d), in its present form, is not conducive to
pharmaceutical innovation.

While curbing evergreening is important, care needs to be taken that

this does not compromise the development of Indian pharmaceutical sector. As
pointed out by the Mashelkar Committee, discouraging incremental innovation
could dissuade both Indian and foreign investors from investing in India.52 The
impact is worse on Indian drug companies that invest substantially on the
improvement of existing drugs. Majority of them lack adequate resources to
develop research intensive "blockbuster drugs". Thus, if bereft of ample incentive
to undertake R&D efforts for incremental innovation in India, they would have to
search for alternative markets which do not have the efficacy requirement. 3 At
present, it is only the MNCs which have the kind of resources necessary for
creating new chemical entities. 4 Providing protection to only new drug classes
would effectively ensure that most pharmaceutical patents are owned by MNCs.

4. Incremental Innovation and Public Health

Allowing patent protection for incremental innovation may also be

beneficial in dealing with public health concerns.56Firstly, by increasing the number

19 Supra note 11.

ioId.
51 Supra note 43.

52 Report of the Technical Expert Group on Patent Law Issues, March, 2009, available at
http://www.patentoffice.nic.in/ (Last visited on September 2, 2009).
53 Shamnad Basheer, Limiting the Patentability of PharmaceuticalInventions and Micro-
organisms: A TRIPS Compatibility Review, November 2005, available at http://papers.
ssrn.com/sol3/papers.cfm?abstract id=1391562. (Last visited September 2, 2009).
51 The current cost of developing a breakthrough drug from discovery to market today may
be as much as US$1 billion. (See supra note 43).
5 Supra note 52.
5 Supra note 43.

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of different drugs in a specific class, it can increase the price competition among
those drugs. This would result in decline of drug prices thereby making them
accessible to ordinary people." Secondly, it can reduce the cost of healthcare by
improving the quality and selection of drugs available to the patients. Further, the
presence of multiple drugs within the same class ensures that there are adequate
back-ups in case a drug goes out of market." Thirdly, the revenue from incremental
innovation can be used to fund development of research intensive "blockbuster
drugs" which make new medicines available to the public in the long run. Fourthly,
new formulations and drug delivery systems can be developed which are
specifically suited to Indian climate. For instance, use of microspheres for the
controlled release of vaccines which make them resistant to extreme heat conditions
could greatly help people living in remote areas of India where there is no
refrigeration. 9 The importance of these drugs can be gauged from the fact that
60% of the essential medicines on the World Trade Organization's Essential Drug
list represent incremental innovation over existing drugs.6" Thus, it is clear that
equating all kinds of incremental innovation with evergreening, would fail to
protect genuine innovations that could greatly benefit millions of people.

C. PROBLEMATIC ASPECTS OF § 3(D): FINDING WAYS TO

MAKE IT WORKABLE

As discussed earlier, § 3(d) is a provision unique to India and seeks to

protect the generic industry by weeding out frivolous patents. However, since
the § is not drafted in clear terms, there is a lack of clarity regarding the criteria of
patentability for incremental innovations. The uncertainties become apparent when
one looks at the interpretation of this provision by the Courts.

1. Glivec Patent Rejection

Glivec (Imatinib) is an anti- cancer drug which is used for the treatment
of a specific medical condition known as chronic myeloid leukaemia. The
development of Glivec started after Novartis researchers came upon the active
molecule imatinib which could target specific cancer causing enzymes without
affecting other enzymes.61 In 1993, Novartis filed patents worldwide covering the
free base imatinib. Later on, imatinib was improved upon by converting it into a
salt form called imatinib mesylate, from which Novartis derived the more stable
beta crystalline form.62 After India's entry into the WTO, Novartis claimed patent

57 Id.
58 Id.
5 Secretariat, World Intellectual Property Organization, Follow- on Innovation and
Intellectual Property, May 2005, available at http://www.wipo.int/patentscope/en/
lifesciences/pdffwho wipo.pdf (Last visited on September 6, 2009).
Id.
I Supra note 2.
62 Id.

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 PATENTABILITY OF INCREMENTAL INNOVATION

over this beta crystalline form in India through a mailbox application.63 It was also
granted EMR over this drug in 2003.

The Madras Patent Office refused to grant patent to the beta crystalline
form of imatinib mesylate in January 2006. The chief grounds of rejection were
lack of novelty and failure to meet the criteria in § 3(d) which requires new forms
of known substances to show "enhanced efficacy" over the original substances
in order to qualify for patent protection.64 Aggrieved by this rejection, Novartis
AG along with its Indian subsidiary Novartis India filed two writ petitions in the
Madras High Court. One of the petitions, which sought a reversal of the order of
rejection by the patent office, was transferred to the Intellectual Property Appellate
Board (IPAB). In the other petition, Novartis asked for a declaration that § 3(d)
was unconstitutional and violative of TRIPS.6 5 With respect to the first ground,
Novartis argued that the use of expressions such as "enhancement of known
efficacy" and "differ significantly in properties with regard to efficacy" without
accompanying guidelines specifying their ambit made § 3(d) ambiguous and
arbitrary and gave uncontrolled discretion to the Patent Controller to apply his
own standards.66 Such arbitrary exercise of power went against the basic principles
of equality enshrined in Article 14 of the Constitution. With regard to the second
issue raised by Novartis, the Madras High Court declined to examine whether §
3(d) was TRIPS-compliant. It held that that it did not have any jurisdiction in the
matter as the TRIPS had expressly provided that any kind of dispute should be
taken before the Dispute Settlement Body of the WTO. It decided only on the
issue of constitutionality of the provision. 67 The Novartis patent rejection provides
an ideal opportunity to look into the various issues surrounding § 3(d).

2. ANarrow Construction of § 3(d).

The relevant part of § 3(d) is reproduced below:

"[T]he mere discovery of a new form of a known substance

which does not result in the enhancement of the known efficacy
of that substance or the mere discovery of any new property or
new use for a known substance..." (Emphasis supplied)

Explanation: For the purposes of this clause, salts, esters, ethers,

polymorphs, metabolites, pure form, particle size, isomers,

Johanna Sheehe, Indian Patent Law: Walking the Line, 29 Nw. J. INTL L. & Bus. 577 (2009).
Novartis AG v. Natco Pharma and Others, Indian Patent Office, Application No.1602/
MAS/1998 (January 25, 2005) as cited in MANUAL OF PATENT PRACTICE AND PROCEDURE, 2008,
The Patent Office, India, available at http://www.patentoffice.nic.in/ipr/patent/Patent
Manual Feedback/WO Ga 34 China.pdf (Last visited on September 7, 2009).
,5 Supra note 11.
" Id.
67 Id.

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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."

The provision makes those new forms or derivatives of a known

substance patentable which enhance the efficacy of the first substance. The
rationale behind the Explanation to the § seems to be that various salt forms,
isomers, polymorphs etc of a known substance that are structurally similar to
the original substance are likely to function in a similar manner and therefore
should not be granted patent protection. A combined reading of the main part
of the § along with the explanation shows that "only those pharmaceutical
derivatives of the original substance which show "significantly" enhanced
"efficacy" are patentable.68

By making the above distinction, the provision intends to separate

evergreening from incremental innovation. However, it does not specify the level
of efficacy required to cross the threshold of patentability. For example, even
though studies conducted by the technical experts showed that the beta crystalline
form of imatinib mesylate showed an increased bioavailability69 of 30% over the
imatinib free base, the Assistant Controller of Patents and Designs refused to
accept this as "enhanced efficacy". 71 Moreover, he failed to provide adequate
reasoning to support his decision. Nothing in the § or in the Act indicates the
kinds of improvements which would qualify as "efficacy". In the absence of a
clear understanding of the term efficacy, it is even more difficult to understand
what constitutes "significantly" enhanced efficacy. Unless one at least has an
idea as to what the type of efficacy is which the § is speaking about, the inclusion
of "differ significantly in properties with regard to efficacy" in the explanation
serves no meaningful purpose. In other words, if one is not sure whether increase
in bioavailability itself qualifies as "efficacy", how can one determine whether
30% increase in bioavailability should or should not be regarded as "significant"
enhancement in efficacy? The patent office did not make any effort to clear any of
these confusions created by § 3(d) with respect to the use of the term "efficacy".

Another problematic aspect is with respect to "interpretation of

known substance". In the case of Novartis, the beta crystalline polymorphic
form was derived from imatinib mesylate which in turn was an improved form of
the imatinib free base. The question which one might ask is whether the
7
comparison of efficacy should be with the free base or imatinib mesylate. 1

Supra note 10.

6 Bioavailability can be defined as "the proportion of a drug which reaches the site
of a
pharmaceutical activity when introduced into the body, more loosely, that proportion of
any substance so introduced which enters the circulation. See supra note 68.
70 Supra note 64.
71 Shamnad Basheer & Prashant Reddy, Ducking TRIPS in India: A Saga involving Novartis
and the Legality of § 3(d), NATIONAL LAW SCHOOL OF INDIA REVIEW, 2008, available at http://
ssrn.com/abstract-1329201, (Last visited on September 6, 2009).

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 PATENTABILITY OF INCREMENTAL INNOVATION

Although, the Assistant Controller of Patents, Chennai insisted that the free
base should be taken as the benchmark for comparison, there were no concrete
reasons given in support of the decision.2

The Madras High Court, while examining the scope of § 3(d) interpreted
"efficacy" to mean only "therapeutic73 efficacy". The Court relied on the Dorland's
Medical Dictionary which defines efficacy as "the ability of a drug to produce the
desired therapeutic effect." The Court further observed that efficacy of a drug is
independent of the potency of the drug. Going by the meaning of the expression
"therapeutic", what the patent applicant would have to demonstrate is how
effective the new discovery would be in the healing of a disease or producing a
good effect on the body.74 Having defined the expression "efficacy" in terms of
therapeutic improvement, the Court goes on to state that it is a very simple exercise
for the patentee to place on record the therapeutic efficacy of a known substance,
and the enhancement in that known efficacy." While making this assertion, the
Court seems to have completely ignored the complexity of proving scientific
propositions. Demonstrating therapeutic efficacy of a new form requires engaging
in expensive clinical trials and other studies which are generally conducted at a
much later stage in the drug development process." Patent applications are filed
in the initial stages of a drug discovery and thus the requirement of showing
efficacy at this stage is an onerous one for majority of the inventors.7

Much of the language of § 3(d) is based on Article 10(2)(b) of Directive

2004/27/EC, a European Union Directive relating to regulatory approval of drugs
for human use. The Article 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 added]

12 Supra note 64.

73 The term therapeutic means healing of a disease, having a good effect on the body. See,
supra note 11.
11 Supra note 11.
75 Id.
71 Supra note 1.
77 Id.

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The underlying notion of "bioequivalence" is common to both the

provisions.78 The EU Directive refers to "efficacy" in the context of drug regulation
and since § 3(d) was imported from it, it may seem logical to interpret the term
"efficacy" used in the latter in terms of healing effect of the drug. Nonetheless, in
the absence of any stipulation in § 3(d) or in the accompanying rules and
guidelines, mandating that only a technical meaning should be given to the term
"efficacy", it is not clear why the Court chose not to interpret "efficacy" in
accordance with its ordinary English meaning. 79 This interpretation would have
made it possible to patent any new useful properties of the new form (like increase
in bioavailability) without having to prove that they enhanced the therapeutic
efficacy of the original medicine." Giving such a highly restrictive meaning to
"efficacy" can have serious implications in terms of protecting incremental
innovation. As discussed above, demonstrating enhanced therapeutic properties
of the drug at the time of filing patent application is a requirement which most
patentees would find very difficult to satisfy. Moreover, a narrow definition would
exclude most of the inventions which are tremendously useful but in non-
therapeutic ways. For instance, the humidity resistant salts and isomers of known
antimicrobial substances developed by Wockhardt have much better solubility
and greater stability in high humidity tropical climates as compared to the original
anti-micro-bacterial compounds patented by Otsuka Pharmaceutical Company, to
fight against bacteria that are immune to ordinary antibiotics.8' Notwithstanding
the fact that they can be of immense value in tropical countries like India, they do
not display enhanced therapeutic properties over the patented drugs and thus
would be ineligible for patent protection. 2 Similarly, Ranbaxy's drug, Cipro-OD,
which uses an innovative drug delivery mechanism to enable patients to take the
medicine only once a day, would not satisfy the "therapeutic efficacy" requirement,
although it is much more economical than the original medicine. 3 Clearly, the term
"efficacy" needs to be interpreted in a more flexible manner in order to incentivise
such useful innovations. However, in the absence of any further clarifications
regarding the meaning of "efficacy", the patent offices in India would continue to
follow the Novartis ruling.

The Court further argued that the use of phrases like "enhancement of
known efficacy" and "significantly different in properties with regard to efficacy"
are not vague or ambiguous. It denied the scope for any confusion by saying it is
scientifically possible to get comparative data to show whether a new form of a
known substance has enhanced the known efficacy of the original substance and
whether the derivatives so derived differ significantly in properties with regard to
efficacy.84 The Court opined that since Novartis was a pharmaceutical giant and
Supra note 43.
Efficacy refers to the power or capacity to produce effects. See generally Oxford English
Dictionary.
Supra note 10.
81 Supra note 53.
82 Id.
Supra note 10.
8 Supra note 11.

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 PATENTABILITY OF INCREMENTAL INNOVATION

not a novice in the field of pharmacology, it cannot plead that it does not know
what "significant enhancement in efficacy" means in relation to derivatives of
known substances.8" It is difficult to support this proposition as it defies common
sense. Since at the time when Novartis had applied for the patent, Indian patent
laws were still in transition, it had no way of knowing that post-2005, § 3(d) would
incorporate the "enhanced efficacy" requirement. Moreover, it is a provision unique
to India as no other country makes a distinction between patentable and non-
patentable pharmaceutical inventions. Further, even assuming that Novartis had
envisaged that there would be some threshold criteria for patentability under the
amended Indian Patents Act, 1970, it would have never imagined that its invention
would have to meet the stringent standard of "therapeutic" efficacy. Therefore, it
is unreasonable to expect that Novartis should have been completely familiar with
the precise meaning and scope of § 3(d). 6

3. § 3(d) and the Feasibility of the Constitutional Challenge

Although the language of § 3(d) is unclear, it does not necessarily

follow that it is violative of Article 14 of the Indian Constitution. It was submitted
that since the wording of the § and the explanation provided therein were vague,
there was a likelihood of the provision being misused."TAs rightly observed by
the Court, the fact that legislation does not include clear definitions or guidelines,
cannot suffice as proof of its arbitrariness. 8 It has to be shown that the provision
is ex-facie violative ofArticle 14. Moreover, simply stating that the § 3(d) confers
uncanalised power on the Patent Controller is not a ground to challenge the
validity of the §. Novartis also argued that an essential legislative function has
been delegated in the process of conferring power upon the Patent Controller's
office to determine as to what constituted a significant enhancement of efficacy. 9
But the Madras High Court relied on the Supreme Court ruling in the case of Jyoti
Pershad v. Union Territory of Delhig0 that as long as the legislature is able to
convey the objects and purposes of a particular legislation, the legislation cannot
be attacked on the ground that there has been an excessive delegation of legislative
power amounting to an abdication of its functions, or that the discretion vested is
uncanalised and unguided which may possibly lead to discrimination. The Court
had opined that:

"If the power or discretion has been conferred in a manner

which is legal and constitutional then the fact that Parliament
could possibly have made more detailed provisions, could
obviously not be a ground for invalidating the law"'

85 Id.
Supra note 10.
Supra note 11.
88 Id.
89 Id.
9" Jyoti Pershad v. Union Territory of Delhi, MANU/SC/0079/1961.
91 Id.

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The Court also depended on the theory of "guided power"9 2which

states that equality is not violated by mere conferment of discretionary power. It
is violated only when it is exercised arbitrarily by those on whom it is conferred.
Further, this doctrine assumes that in the event of such misuse, courts can step in
to remedy the situation. Therefore, in case the statutory authority exercises its
discretionary power in an arbitrary manner, reliefs are available through courts.9"
Hence, § 3(d) cannot be held to be violating Article 14 simply on the ground that
it allows for a possibility of misuse ofpower conferred upon the statutory authority.

4. Significance of the I PAB Decision on Glivec Patent Application

On June 26, 2009, the IPAB ruled that Glivec cannot be patented. As
expected, the primary ground of rejection, was the failure to satisfy the efficacy
standard in § 3(d). It stated that even though the invention is both novel and
inventive, Novartis could not demonstrate that the beta crystalline form was
"significantly" more efficacious than imatinib mesylate.94 This means that even if
an invention is otherwise patentable as per the patentability criteria, it could still
be barred by § 3(d). 95 Further, considering that the Board referred to § 3(d) as a
"higher standard of inventive step" and at the same time found that the beta
crystalline form to be "inventive", how did it conclude that the latter still does not
satisfy § 3(d)?

One possible reason for the above incongruity can be the narrow
interpretation of "efficacy" by the Board to mean only "therapeutic efficacy". The
Board held that although the beta crystalline form had many advantages such as
improved bioavailability, thermodynamic stability, enhanced flow properties and lower
hygroscopicity, these did not amount to an increase in the "therapeutic" efficacy of
the drug. 96 Thus, even if a new form is inventive in that it has genuine non-therapeutic
advantages, it would not qualify under § 3(d) which requires only heightened
"therapeutic efficacy".97 The Board did not try to explain the rationale behind limiting
patentability to only therapeutic improvements or the factors to be taken into account
while determining increased "therapeutic efficacy" of a new drug form.

The Board also did not allow Novartis to add data to substantiate the
patentability of its invention. The Board held that Novartis had to rely on the
material provided on the date of application of the patent. 98 This finding is also

H.M. SEERVAI, CONSTITUTIONAL LAW OF INDIA, 546 (2000).

Supra note 11.
Intellectual Property Appellate Board, Order No. (100/2009), June 26, 2009, available at
http://www.ipab.tn.nic.in/Orders/100-2009.htm. (Last visited on September 2, 2009).
15 Shamnad Basheer, Breaking News: Indian IP Tribunal Denies Patent to Novartis' Glivec,
July 3, 2009, available at http://spicyipindia.blogspot.com/2009/07/breaking-news-
novartis-loses-glivec.html (Last visited on September 6, 2009).
96 Id.
97 Id.
91 Supra note 94.

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 PATENTABILITY OF INCREMENTAL INNOVATION

unreasonable since Novartis could not have known on the date of applying for
patent (India was still updating its patent laws) that it would have to produce
material sufficient to satisfy the "enhanced efficacy" standard under § 3(d).99

The Board's ruling against Novartis was also influenced by the high
pricing of the drug.' It observed that granting patent on Glivec, would severely
affect the availability of the medicine, which in turn would be detrimental to public
order. According to it, this was a valid reason for denying patent to Glivec, under
§ 3(b). 0' Going by the argument of the Board, it seems that granting a patent to a
drug would not only depend upon satisfaction of the patentability criteria but
also on its pricing. It is true that a concern for public health is a substantial one for
a country like India. However, this does not warrant using drug pricing as a factor
for determining whether patent should be granted to a drug.

Not only did the Board fail to provide any clarification regarding
the true meaning and scope of § 3(d), but by relying on extraneous factors like
drug pricing, it also created further uncertainty regarding patentability of
pharmaceutical inventions.

5. Roche v. Cipla Controversy:

Roche had developed an anti- cancer drug Erlotinib, which was being
marketed as Tarceva. It had obtained patent for the drug in 2007. Ayear later, Cipla
introduced a generic version of the drug Erlocip at one-third the price of Tarceva.
Roche sued Cipla and approached the Delhi High Court for a grant of interim
injunction restraining Cipla from manufacturing, selling or exporting Erlocip. Cipla
retaliated by challenging the validity of the patent itself and argued that the
patent should not have been granted in the first place. 10 2 Cipla contended that as
admitted by Roche itself, Erlotinib was a derivative of a known compound
Quinazoline. Therefore, it lacked an inventive step as it only improved upon a
prior art. 103 More specifically, it claimed that it was a derivative of a known product,
Gefitinib, which was structurally similar to Erlotinib and as such the patent
application fails to provide any data to show that Erlotinib is more efficacious
than Gefitinib.'04 Therefore, it failed to meet the standard of "efficacy" set out for
derivatives in § 3(d). According to Cipla, Roche was indulging in evergreening, a
phenomenon which § 3(d) specifically sought to prevent. '°Another argument of

Supra note 95.

Id.
The Indian Patents Act, 1970, § 3(b) states "an invention the primary or intended use or
commercial exploitation of which could be contrary to public order or morality or which
causes serious prejudice to human, animal or plant life or health or to the environment".
102Supra note 12.
Id.
104 Id.
105 Id.

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Cipla was that since the price-differential between the two drugs was so high,
public interest dictated that no injunction be granted in favour of Roche." 6

Although the single judge of the Delhi High Court conceded that
Cipla had raised a credible challenge to the validity of the patent, it declined to
examine whether Erlotinib was in fact a derivative of Gefitinib, at the interlocutory
stage. However, it concluded that the test of non-obviousness of an invention
and discovery of existence of significantly enhanced efficacy are both equally
important for determining patentability." 7 Thus, even if a pharmaceutical innovation
involves an inventive step, if it is a new form of a known substance, then it has to
prove that the invention significantly enhances the efficacy of the known
substance. This seems to indicate that § 3(d) involves a standard over and above
the inventive step, which must be satisfied by derivatives of known substances
in order to get a patent. The Court's refusal to grant injunction in favour of Roche
was, however, based on the public interest factor. In this regard, it relied on an US
Supreme Court decision, E-Bay v. MercExchange, °8 where it was held that granting
injunction in patent cases was a discretionary remedy rather than a right and had
to be granted keeping in mind several factors, one of which is public interest." 9
The crucial issue before the Court was which party would suffer "irreparable
injury" by granting or refusing to grant the injunction. In this regard, it opined
that any damage caused to Roche, which is a pharmaceutical giant, could be
compensated in monetary terms. On the other hand, granting injunction in their
favour would actually deny patients access to a life-saving drug on account of
Roche's monopoly pricing."' Thus, irreparable hardship would be caused to
thousands of cancer patients who are dependent on Cipla's generic version of
Tarceva."1 Therefore, the Court found that the balance of convenience had to be
tilted in favour of providing access to a life saving drug.

While the judgment takes the view that § 3(d) is a heightened standard
of non-obviousness," 2 a stand taken by the IPAB as well while rejecting the
application for Glivec, it does not shed much light on the contours of § 3(d). In the
appeal, the Division Bench of the Court adopted a strict interpretation of§ 3(d). It
was held that Erlotinib would be obvious to a person skilled in the art in view of
the existence of the earlier known compound Gefitinib.113 § 3(d) clearly provides

"'Id.
107Id.
E-Bay v. MercExchange, 547 US 388 (2006).
Shamnad Basheer, Indian Express Piece: The Rhetoric of Patent Busting, April 12, 2008,
available at http://lawandotherthings.blogspot.com/2008/04/roche-vs-cipla-rhetoric-of-
patent.html (Last visited on September 2, 2009).
Supra note 12.
11d.

112F.Hoffman-La Roche Ltd & Anr. v.Cipla Ltd, F.A.O. (OS) 188/2008.
Id.
113

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 PATENTABILITY OF INCREMENTAL INNOVATION

that derivatives of known substances, unless they demonstrate significant increase

in efficacy, would not qualify for patent protection. Thus, the patent could not be
granted in this case unless it is shown that Erlotinib is more efficacious than
Gefitinib. The Court states that since Roche had failed to provide any evidence
before the Controller of Patents in support of this, the validity of the patent was in
serious doubt.114

The decision seems to have considered Erlotinib as a derivative of

Gefitinib in which case it would be deemed to be the same substance as Gefitinib
in the absence of any increased efficacy over the latter. However, the Court's
decision's does not clarify whether a derivative refers only to structurally similar
compounds (in this case Gefitinib had a similar chemical structure to Erlotinib)
within the meaning of § 3(d). This may cause confusion regarding the scope of
the term "derivative'.

6. Resolving the Ambiguities of § 3(d)

a) Patentability criteria or patent eligibility.

§ 3(d) is one of the most important provisions in the Indian Patents

Act, 1970 as it deals with pharmaceutical inventions. However, as itis clear from
the discussion above, the structure and wording of the § suffers from many
infirmities. This part will discuss certain changes that would assist in making the
§ more coherent.''

§ 3(d) covers those subject matters which are not eligible for patent
protection, and in that respect it is a patent eligibility test. However, as seen in the
cases discussed above, the enhanced efficacy requirement embodied in § 3(d) is
often looked upon as heightened standard of non-obviousness in addition to the
non-obviousness test 116 used to measure the "inventive step" criteria. This causes
confusion as to whether § 3(d) represents a patent eligibility criteria or a
patentability standard. While the former determines whether an invention falls
within the scope of subject matter suited for patent protection, the latter refers to
requirements that must be fulfilled before a patentable invention can be granted
patent protection.'" Moreover, eligibility test is conducted at the beginning

14 Id.
115The changes suggested in this part are based on those proposed by Basheer and Reddy,
supra note 10.
The earlier § 20a) defined 'inventive step' as "afeature that makes the invention not
obvious to a person skilled in the art." After the 2005 Amendment, the section reads as
'inventive step' means a feature of an invention that involves technical advance as
compared to the existing knowledge or having economic significance or both and that
makes the invention not obvious to the person skilled in the art". The yardstick for
measuring an 'inventive step' remains the same as before, that is, "not obvious to a
person skilled in the art". However, there is a stipulation that the invention should
involve a 'technical advance' or have some 'economic significance'.
117 Supra note 10.

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whereas a non-obviousness requirement is examined much later on. It is evident

that § 3(d) involves examination of non-obviousness standards that determine
patentability rather than patent eligibility. Therefore, it would be more convenient
if the provision is specifically referred to as a patentability criterion rather than a
patent eligibility standard." 8

b) Inconsistency between the Main part and the Explanation

From the wording of the section, it is not clear whether the Explanation
broadens the scope of the main section with respect to the requirement of efficacy.
The main part of the provision refers only to "enhancement of known efficacy"
while the Explanation is more expansive and speaks of "significant differences in
properties with regard to efficacy". While the former narrows down the parameters
for the determination of "efficacy", the latter seems to interpret the term "efficacy"
more broadly. This creates a tricky situation when a new form of a known substance
is found to have a new property or aspect hitherto unknown." 9 For instance, if a
new form of an existing substance which is as potent as the original substance in
treating a disease (A), is highly effective in curing a different medical condition
(B) as well, under the main part of the section it would not be patentable since it is
not more efficacious than the original substance in treating disease (A). This
result is anomalous since the objective of § 3(d) is to keep out only those patents
that lack genuine innovation. Given the fact that an entirely novel use of the new
form is more inventive than an "enhancement in known efficacy", it is highly
unlikely that the section would exclude it from patentability. 120However, the new
form having the capacity to treat disease (B) would be patentable under the
Explanation since the term "efficacy" used in this part is not qualified by the word
"known". The new use of the new form (treating disease B) would clearly fall
within the scope of the expression "differ significantly in properties with regard to
efficacy". Therefore, it is clear that the Explanation has to be read expansively in
order to include new uses of new forms of a known substance within the scope of
patentable subject matter. This inconsistency in the wording of § 3(d) has to be
resolved by including new use of a new form as patentable subject matter.' 2' This
can eliminate any confusion with regard to the true import of this provision.

c) The Definition of Known Substance needs to be clarified

Under § 3(d), it is not clearly discernible what constitutes a known

substance with which comparison of the new form is to be made. For instance,
in the Novartis case,'hw22 was one to determine whether it was the Imatinib
free base or the Imatinib Mesylate which would be regarded as "known

I's Id.
119Id.
120 Id.
121 Id.
122 Id.

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 PATENTABILITY OF INCREMENTAL INNOVATION

substance" for the purpose of comparing the "efficacy"? The IPAB held Imatinib
Mesylate as the "known substance" on the ground that the patent obtained by
Novartis, for imatinib free base and all the acceptable salts, had disclosed and
enabled its development. However, in situations where a new form is merely
obvious from prior art but not anticipated 2 ' from it, it may not be accurate to
classify it as a known substance. Thus, § 3(d) needs to be amended to clarify
that a known substance is one which is not novel in order to ensure that all
obvious substances are not categorised as "known"."'

d) Efficacy Requirement and Standard of Proof

As discussed earlier in this part, attributing a narrow meaning to the

term "efficacy" is not feasible since it excludes useful non-therapeutic innovations
which otherwise satisfy the patentability requirements. A more liberal construction
of "efficacy" would ensure that various useful properties like heat stability,
humidity resistance, increased bioavailability, etc. are also protected.'Z India could
also incorporate the non-obviousness principles used in the USA when dealing
with similarly structured compounds. For example, in Takedav. Alphapharm,'26 it
was held that if a new form is structurally similar to the original substance, this
does not show prima facie obviousness. There has to be evidence to prove that it
would have been obvious to a skilled person to reach the new form by modifying
the original substance in a particular way. 2 7In India, however, a structural similarity
of the new form with the "known substance" is enough to prove that the new form
was obvious.' 28 Moreover, in US, "unexpected results" are not restricted to
therapeutic efficiency. Takeda v. Alphapharm,12 9 considered less toxicity of the
new form of the older compound to be an "unexpected property".' However,
given the fact that the efficacy standard of § 3(d) applies to only therapeutic
improvements, it is highly unlikely that less toxicity would have qualified as
"enhanced efficacy".

Anticipation happens when a prior art reference or event discloses all the features of a
claimed invention and enables a person of ordinary skill in the art to make and use the
invention. In such a case, the claim is then said to lack novelty. In Verdegaal Bros. v.
Union Oil Co. of California, 814 F.2d 628, 631, 2 USPQ2d 1051, 1053 (Fed. Cir. 1987),
it was held that "A claim is anticipated only if each and every element as set forth in the
claim is found, either expressly or inherently described, in a single prior art reference".
114 Supra note 10.
125 Id.

IM 480 F.3d 1348 (Fed. Cir. 2007).

117 Id.; Shamnad Basheer, Takeda v. Alphapharm: Implications for § 3(d), November 6,
2007, available at http://spicyipindia.blogspot.com/2007/1 1/takeda-vs-alphapharm-
implications-for.html. (Last visited on September 6, 2009).
12S Id.
129 Id.
IId.

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 NUJS LAW REVIEW 2 NUJS L. REV.607 (2009)

Presently, it is not certain what kind of information is required to prove

"enhanced efficacy". As discussed earlier, if the efficacy is construed to mean
only therapeutic efficacy, then the applicant might have to conduct clinical trials
in order to provide the relevant data which is very difficult to procure. Moreover,
conducting clinical trials might entail disclosing the invention to the public before
filing for patent.'31 This can threaten the novelty of the invention. Thus, § 3(d)
could provide that the standard of proof required for establishing "efficacy" "is
one that is easier to fulfil requiring only that amount of data that is relatively more
ethical to generate 132

e) How to construe "significantly" used in § 3(d)

It is not possible to set one particular standard for determining when

the increased efficacy of the new form would qualify as "significant efficacy"
within the meaning of the provision. The Patent Office Manual also seems to
support the above view when it observes that:

"The efficacy need not be quantified in terms of numerical

value to determine whether the product is efficacious because
it is not possible to have a standard numerical value for efficacy
for all products including pharmaceutical products."'' 3

Even the Madras High Court, in NovartisAG v. Union of India'34 had

pointed out that it would be imprudent to fix a specific formula to be applied in all
cases in order to find out whether a newly discovered form of a known substance
shows enhanced efficacy over the original substance or whether the derivatives
of a substance differ significantly in properties with regard to efficacy. 35 Scientific
development leads to unforeseeable inventions and devising a static formula for
determining whether the increase in efficacy is sufficiently "significant", would
severely curtail the discretionary powers of statutory authorities while determining

"I Supra note 10.

112For fixing a standard of proof, the decision given by the US Court of Appeals for the Federal
Circuit in Nelson v. Bowler, 626 F.2d 853 can be looked into. This case held that when a
patent is claimed for a therapeutic use of an invention, the patentee need not prove that the
claimed therapeutic use is correlated to a specific pharmacological or biological activity as
a matter of statistical certainty. The applicant also need not demonstrate that the claimed
invention is actually successful in treating human beings. Only a reasonable correlation has
to exist between a particular activity and the claimed use. The patentee can establish this
reasonable correlation by relying on statistically relevant data documenting the activity of
a compound or composition, arguments or reasoning, documentary evidence (e.g., articles
in scientific journals), or any combination thereof [See United States Patent and Trademark
Office, Special Considerations for Asserted: Therapeutic or Pharmacological Utilities,
available at http://www.uspto.gov/web/offices/pac/mpep/documents/2100_2107_03.htm.
(Last visited on September 2, 2009)].
133 Supra note 64.

"I Supra note 11.

135 Id.

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 PATENTABILITY OF INCREMENTAL INNOVATION

patentability of new pharmaceutical inventions.' 36 Thus, instead of attempting to

establish a uniform standard for construing the term "significantly", it is much
more feasible to determine "significance" on a case to case basis depending upon
the comparative data and other materials provided before the decision-making
forum. In this regard, the PHOSITA test can be used. 137 In other words, when a new
form is derived from an existing substance, the views of a person skilled in the art
should be used to assess whether the new form demonstrates "significantly
enhanced efficacy"."'

D. STRIKING A BALANCE BETWEEN INCREMENTAL

INNOVATION AND PUBLIC HEALTH

Every patent system employs some mechanism or the other to ensure

that the monopoly rights enjoyed by the patent holders do not compromise public
health by denying access to pharmaceutical drugs. § 3(d) is one such provision in
the Indian patent system which uses a refined form of "non-obviousness"1 "9
standard in order to protect the general public from the harmful effects of
evergreening. While the provision is not clearly drafted and creates scope for
confusion, it cannot be denied that it has gone a long way in promoting access to
cheap generic medicine. Providing a proper definition of "efficacy" is therefore,
necessary to ensure that the § is not continuously attacked on the ground of
,'vagueness" which would serve to undermine its significance.

1. US Position on Protection of New Forms

It is often argued that India is the only country to adopt a restrictive

approach towards patentability of new forms or new uses of known substances.
This notion is not wholly accurate since most countries have myriad ways to
exclude minor alterations of known active ingredients from patentability. This is
true for even USA whose patent regime is generally considered to be "patent-
friendly". The US courts, have used a number of principles to disallow patents on
derivatives of known substances. For instance, in Schering Corp v. Geneva
PharmaceuticalsInc.,14°the Federal Circuit Court employed the doctrine of inherent
anticipation to hold that a patent on a previously unknown compound may be
invalidated as inherently anticipated if the compound is later discovered to be a
metabolite of another compound in prior art.'4 ' It opined that inherent anticipation

Supra note 10.

Person having Ordinary Skill in the Art. (See id.).
Id.
"Under § 3(d) most forms of existing pharmaceutical substances are deemed obvious unless
they demonstrate increases efficacy" (See supra note 53).
140 339 F.3d 1373, (Fed. Cir. 2003).
Michael K. O'Neill & George K. Ng, Doctrine of Inherent Anticipation is Clarified:
Patentsmay be invalid if compound metabolite of priorart, NATIONAL LAW JOURNAL, December
8, 2003, available at http://www.fitzpatrickcella.com/images/pub attachment/attachment
I l8.pdf. (Last visited on September 2, 2009).

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 NUJS LAW REVIEW 2 NUJS L. REv.607 (2009)

does not need appreciation and recognition in prior art, so long as the disclosure
is a "necessary and inevitable" outcome of prior disclosures. 14 2 Accordingly, it
rejected the patent on the metabolite of an antihistamine drug because the
metabolite "necessarily and inevitably" formed upon ingestion of the previously
patented antihistamine under normal conditions' ."

The US courts also use the doctrine of double patenting to prevent

patenting of new forms of already known substances. This doctrine prevents an
inventor from claiming more than one patent on the same invention or obvious
modifications or alterations of the same.' 44 The phenomenon of double patenting
is very similar to patent evergreening as both serve to enhance the profits of the
manufacturer of the patented drug by eliminating competition from other drug
manufacturers. The purpose of the double patenting doctrine is to allow public to
get free access to the original patented product and all the obvious modifications
of the same after the expiration of the period.'45 This is similar to the rationale
behind § 3(d) of the Indian Patents Act, 1970 which also creates a bar against
insignificant modifications. Furthermore, as with § 3(d), double patenting also
compares a claim for modification over an existing patent with the original invention
to determine if the variation satisfies non-obviousness standards.

The patent misuse doctrine used in the US also provides another

parallel to § 3(d). It prevents pharmaceutical companies from extending patent
protection over their drugs by acquiring a multitude of patents covering essentially
the same invention.'46 In such cases, the courts invoke the non-obviousness
principle to invalidate patents. For instance, in a recent decision Pfizer Inc. v.
Apotex Inc., Pfizer's patent on a hypertension drug was invalidated as its active
ingredient was a salt form of a known substance. 41 7The Court had opined:

"[A] rule of law equating unpredictability to patentability,

applied in this case, would mean that any new salt ... would be
separately patentable, simply because the formation and
properties of each salt must be verified through testing. This
cannot be the proper standard since the expectation
148
of success
need only be reasonable, not absolute."'

112 Supra note 140.

143 Id.
144 Paul Pitts, Eli Lily v Barr: Double PatentingAnalysis can be anything but Obvious, 4 TuE.
J. TECH. & INTELL. PROP. 253 (2002).
145 Id

Daniel J. Gifford, Government Policy Towards Innovation in the United States, Canada,
and European Union as manifested in Patent Copyright, and Competitive Laws, 57 SMU
L. REV. 1339 (2004).
147 480 F.3d 1348, 1364 (Fed. Cir. 2007).
141 Supra note 147.

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 PATENTABILITY OF INCREMENTAL INNOVATION

Providing limited patent protection to new forms or combinations of

known substances, which is the rationale behind § 3(d), is not a radical deviation
from the normal practices used in other countries to regulate patenting of
derivatives. US, which has much more liberal standards of patentability with respect
to incremental innovations, has also adopted methods to prevent patenting of
minor follow-on inventions. However, the threshold of patentability for new forms
or new uses of known substances would inevitably depend on the socio-economic
factors of the country. To this extent, differences are bound to exist.

2. § 3(d): Exploiting the Flexibilities under TRIPS

As discussed earlier, Novartis had challenged § 3(d) as being

incompatible with the TRIPS. Although the Madras High Court did not decide
this issue stating that the proper forum in this regard would be the Dispute
Settlement Body of the WTO, nonetheless it is important to examine whether §
3(d) is in consonance with TRIPS requirements of patentability.

Article 27 of the TRIPS provides that "patents shall be available for

any inventions, whether products or processes, in all fields of technology,
provided that they are new, involve an inventive step and are capable of industrial
application". This Article enjoins a responsibility on the member states to adopt
certain minimum standards to provide patent protection in all fields of technology.
However, since none of the terms have been specifically defined in the Agreement,
it allows the member countries to design their patent laws according to their own
convenience so long as they satisfy the broad patentability requirements. TRIPS
also gives due importance to protection of public health. In this regard, Article 8
provides that "Members may, in formulating or amending their laws and regulations,
adopt measures necessary to protect public health and nutrition, and to promote
the public interest in sectors of vital importance to their socio-economic and
technological development, provided that such measures are consistent with the
provisions of this Agreement". Article 7 of TRIPS addresses the social and
economic concerns of the member nations. It specifically states that "The
protection and enforcement of intellectual property rights should contribute to
the promotion of technological innovation and to the transfer and dissemination
of technology, to the mutual advantage of producers and users of technological
knowledge and in a manner conducive to social and economic welfare, and to
balance of rights and obligations." Additionally, TRIPS allows the member countries
to depart from the ordinary patentability requirements under exceptional
circumstances. Article 27 states that "Members may exclude from patentability
inventions, the prevention within their territory of the commercial exploitation of
which is necessary to protect ordr6 public or morality, including to protect human,
animal or plant life or health or to avoid serious prejudice to the environment,
provided that such exclusion is not made merely because the exploitation is
prohibited by their law."

A bare perusal of the relevant provisions in TRIPS clearly shows

that the member nations have been given significant flexibilities to frame patent

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 NUJS LAW REVIEW 2 NUJS L. REv.607 (2009)

laws which reflect their social and economic needs. As mentioned earlier, terms
like "invention", "inventive step, 149 and "industrial application"' used in Article
27.1 have not been specifically defined giving the member countries freedom to
decide the criteria of patentability within the broad parameters of TRIPS.' 5' In
the absence of a precise definition of patentability, there is nothing to prevent
§ 3(d) from using an "efficacy" requirement for determining patentability of new
forms of known substances. More importantly, Article 8 gives considerable
leeway to the developing countries to design a patent system which is conducive
to the protection of environment and public health. Article 27.2 enhances the
scope of this flexibility by permitting member nations to exclude certain inventions
from patentability for protecting public interest. As discussed earlier in the
article, high drug pricing, which is a natural consequence of evergreening,
restricts access to essential medicine, especially in developing countries like
India. Since § 3(d) specifically aims to prevent evergreening, it clearly qualifies
as a "measure necessary to protect public health" within the meaning of Article
8. Virtually none of the member nations have utilized the flexibilities in the TRIPS
provisions for promoting public interest."I § 3(d), if properly amended to remove
the ambiguities surrounding the definition and scope of "efficacy", represents
an innovative way to utilize the flexibilities provided in TRIPS. Thus, even if §
3(d) is challenged before the WTO panel, it is unlikely that it would strike down
a provision which seeks to provide low cost medicines to the general public by
creating an "efficacy" barrier. However, care needs to be taken that "efficacy" is
not construed in such a narrow manner that patents are restricted to only new
chemical entities as this may amount to a TRIPS violation.'53

3. Balancing Patent Rights and Public Interest:

§ 3(d) is often viewed as an undesirable provision because of its

restrictive approach towards incremental innovation. However, removal of this
provision altogether from the Indian Patent Act, 1970 is not a feasible option for
India. § 3(d) filters out the unmeritorious inventions in the initial stages thereby
decreasing the workload of the understaffed patent office. It acts as an additional
safeguard against frivolous patenting. In its absence, there would be no check on
the patentability of new forms of known substances, which would significantly
enhance the incidence of evergreening.

Article 27 of the TRIPS which defines "patentable sub ject matter", specifically explains
that "the terms 'inventive step' and 'capable of industrial application' may be deemed by
a Member to be synonymous with the terms 'non-obvious' and 'useful' respectively."
150 Id.

151Supra note 24.

152 M. Ho Cynthia, A Nei, World Orderfor Addressing Patent Rights and Public Health, 82
L. REv. 1469 (2007).
CHI. KENT.
1 Shamnad Basheer, The Glivec Patent Saga: A 3-D perspective on Indian Patent Policy
and TRIPS Compliance, available at http://www.atrip.org/upload/files/essays/Shamnad
%20Basheer%20Glivec%2OPatent%20Saga.doc.

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 PATENTABILITY OF INCREMENTAL INNOVATION

Today, India is a developing country having technological know-how

comparable to many developed countries. Its patent system needs to incentivize
innovations in sectors like pharmaceuticals which are developing rapidly. 15 4 At
the same time, given the existing level of poverty in the country, high pricing of
drugs would deny millions of people access to life-saving drugs.' While
protecting innovations like new drug delivery systems developed by domestic
majors like Ranbaxy is helpful in promoting new research and development, one
cannot ignore the fact that liberal interpretation of patentability criteria can have
serious repercussions on public health. Therefore, there is a need to strike a
balance between the two conflicting priorities: interest of the inventors who
undertake considerable R&D investment on incremental innovation and the general
interest of the public which requires restricting the scope of patentability of
pharmaceutical substances. § 3(d) can help strike this balance by protecting only
those new forms of known pharmaceutical substances that represent genuine
incremental innovations. However, this would hinge on the interpretation of the
term "efficacy". If it is interpreted too strictly to mean only "therapeutic efficacy",
it would harm innovation prospects in the pharmaceutical sector. Moreover, given
the difficulty in proving such efficacy, it might effectively restrict patents to only
new chemical entities. 56 On the other hand, too liberal an interpretation would
dilute the efficacy standards and encourage frivolous patenting. Thus, a proper
balancing of these two conflicting interests requires that standard of efficacy
should be fixed at a reasonable level.'7A reasonable standard of efficacy entails
some level of certainty with respect to the meaning of "efficacy". Therefore, there
is an immediate need to amend § 3(d) to provide clearer standards of patentability
for pharmaceutical innovations.

II. CONCLUSION

After independence, India's patent system was geared towards

establishing a patent regime conducive to the development of an indigenous
generic pharmaceutical industry. For this purpose, pharmaceutical products were
excluded from patentability under the Indian Patents Act, 1970. However, when
India became a part of the WTO regime, it was compelled to expand patent
protection to pharmaceutical products in order to align its law with the requirements
set out in TRIPS. Nonetheless, the fear of frivolous patenting in the form of
evergreening in pharmaceutical products gave rise to the urgent need to provide
for a specific provision aimed at curbing this pernicious practice. It was with this
objective in mind that § 3(d) was amended to incorporate the enhanced efficacy
requirement for determining the patentability of incremental innovation. Although
the object behind § 3(d) is a laudable one given the fact that it seeks to protect

154 Id.
155 Id
"I Supra note 153.
157Id

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larger public interest, the broad language used in the section excludes most kinds
of incremental innovation. This can be harmful in the long run since genuine
incremental innovations play a vital role in the development of new medicine.
Such innovations also serve to enhance the safety and efficiency of existing
drugs thereby improving the quality of life of patients. However, most of them
would find it difficult to satisfy the enhanced efficacy standard, especially if it is
interpreted in a drug-regulatory sense to mean only "therapeutic efficacy". A
patent regime which protects only new chemical entities would fail to provide any
incentive to domestic majors like Ranbaxy which undertake considerable R&D
efforts for improving existing drugs. A case study on the issue shows that the
ambiguous wording of § 3(d) makes the patentability requirements for incremental
innovation highly uncertain. Thus, amendment of§ 3(d) is very important in order
to bring some clarity in the law relating to pharmaceutical innovations. A clearly
worded § 3(d) would be able to peg the efficacy requirement at a more reasonable
level, which in turn would enable the protection of truly inventive innovations
without exacerbating the chances of evergreening.

October - December, 2009