Sunday, January 11, 2015

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

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 The patent was revoked on grounds of lack of inventive step and insufficient disclosure.

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

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

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

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

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

Delhi High Court Enforces Novartis’s INDACATEROL against CIPLA

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

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

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

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

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

Operative Portion 

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

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

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

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

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

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

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

Thursday, January 8, 2015

Powers of the Competition Commission to deal with Exploitative Abuse

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

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

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

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

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

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

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

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

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

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

Friday, January 2, 2015

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

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

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

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

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

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

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

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

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

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

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

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

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

Thursday, January 1, 2015

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

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

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

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

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

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

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

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

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

Saturday, November 8, 2014

Division Bench of the Delhi High Court on Section 8 of the Patents Act and Judgment on Admission of its Violation

On November 7, 2014, the Division Bench of the Delhi High Court pronounced its 23-page verdict in Sukesh Behl & Anr vs. Koninklijke Phillips Electronics. The issue before the Division bench in this case may be broken down as follows:

a. In assessing compliance or alleged violation of Section 8 of the Patents Act, 1970 by a patentee in the context of a revocation proceeding under Section 64(1)(m), does the Court have the power to exercise its discretion to delve into the materiality of the violation and the bona fides of  the patentee?

b.   Does the presence of “may” in Section 64(1) vest the Court with the power to not revoke a patent despite arriving at the conclusion that the patentee has not complied with the requirements of Section 8? In other words, is the “may” a “may” or a “shall”?

c.    Can an admission of violation of Section 8 lead to a judgment on admission under Order 12 Rule 6 of the CPC?

This context is important since the Court was not seized of the effect of prima facie non-compliance of Section 8 by a patentee on his entitlement to an interim injunction under Order 39 Rules 1 and 2 of the CPC. Simply stated, the standards applied and the considerations that go into are significantly different when analyzing the issue of Section 8 compliance in the context of judgment on admission and an application for interim injunction, and this is a view that I agree with.  

To this extent, there is no inconsistency between the earlier decision of the Delhi High Court on Section 8 in Chemtura Corporation vs. Union of India (2009), wherein Justice Muralidhar had held that a prima facie violation of Section 8 poses a credible challenge to the validity of the patent and hence disentitles a patentee to the grant of an interim injunction. This view has been endorsed by the Division Bench in paragraph 39 of the Phillips decision, which is reproduced below

39. In Chemtura Corporation Case (supra), this Court was dealing with grant of injunction under Order XXXIX Rule 1 and 2 of CPC. Having recorded a prima facie satisfaction that there had been a failure by the plaintiff to comply with the mandatory requirement of Section 8(1), this Court held that the interim injunction in favour of the plaintiff cannot be continued. The question whether the power conferred under Section 64(1) of the Patents Act for revocation of the patent is discretionary or mandatory neither fell for consideration nor adjudicated by the Court in the said decision. Therefore, the learned Single Judge had rightly distinguished Chemutra Corporation Case (supra) relied upon by the learned counsel for the appellants/defendants.

Now let’s proceed to the Division Bench’s discussion on the issues enumerated above.

In the facts of this case, the Defendant/ Appellant, Maj. (Retd) Sukesh Behl, alleged in his written statement that Plaintiff’s patent IN218255 was liable to be revoked under Section 64(1)(m) for failure to disclose to the Controller of Patents, information relating to its corresponding foreign patent applications required under Section 8.

In response to this allegation, the Patent agent of the Plaintiff in his letter dated 14.09.2012 (subsequent to the institution of the suit on 24.07.2012) informed the Controller of Patents that certain details regarding the corresponding foreign patents applications had not been disclosed during the prosecution of the Indian patent and requested that the said information be taken on record. Along with the said letter, an affidavit was filed stating that the agent had received documents relating to the status of the said foreign applications way back in 2004. However, he had inadvertently failed to take note of information which was printed at the back of the first page of the documents received by him. In other words, according to the Plaintiff, the omission was not deliberate and certainly not at the behest of the Plaintiff. 

As a consequence of the admission of omission made by the Plaintiff’s patent agent, the Defendant/Appellant moved for a judgment on admission under Order 12 Rule 6, seeking a decree of revocation in the Counter-claim filed by him under Section 64. The submission of the Defendant was that in light of the unequivocal admission by the Plaintiff, contravention of Section 8 was manifest which must lead to revocation of the patent in the Counter-claim without the need for further examination at trial. Further, since there is no room for exercise of discretion under Section 64(1)(m) where the situation relates to failure to disclose information (as opposed to a situation where false information has been furnished), there is no discretion available to the Court to not revoke a patent if failure to disclose information is established. Since the Plaintiff itself had admitted to this failure in an affidavit, the patent deserved to be revoked all the more without any need for enquiry on the aspects of willful suppression and the materiality of the information suppressed.

The Patentee/Plaintiff on the other hand contended that that the revocation of a patent is not warranted unless the Court finds that the omission was deliberate and the information not submitted was material to grant of patent. Since such adjudication requires a detailed examination, at trial, the Plaintiff contended that the Single Judge was right in dismissing the application under Order 12 Rule 6. 

In this context, readers may recall my earlier post on Section 8 in the context of the Roche vs. Cipla decision of Justice Manmohan Singh, wherein I had said the following:

1. Is there any room for exercise of discretion under Section 64(1)(m) once violation of Section 8 is established to the satisfaction of the Court or the IPAB?
2. Assuming there exists room for exercise of discretion, did the Learned Single Judge take a reasoned approach in exercising his discretion to not revoke the patent? In other words, has the Single Judge sufficiently reasoned as to why he was of the opinion that the patent on Erlotinib did not deserve to be revoked “solely on the ground of non-compliance” of Section 8?
I had further gone on to say the following:

Section 64(1)(m), when read with the preamble, reads as follows:

64. Revocation of Patents: (1) Subject to the provisions contained in this Act, a patent, whether granted before or after the commencement of this Act, may, [be revoked on a petition of any person interested or ofthe  Central  Government  by  the  Appellate  Board  or  on  a  counterclaim  in  a  suit  for infringement of the patent by the High Court] on any of the following grounds, that is to say—
(m)  that the applicant for the patent has failed to disclose to the Controller the information required by section 8 or has furnished information which in any material particular was false to his knowledge;

The Learned Single Judge placed reliance on the “may” in the preamble to sub-section (1) to conclude that the “may” provided for exercise of discretion by the Court or the IPAB. The question is, is the “may” to be interpreted as “shall”, or as “may”?

It needs to be pointed out that the preamble, and consequently the “may” in Section 64(1) is applicable equally to all 14 grounds of revocation which are enumerated under Section 64(1). Therefore, it would be difficult and probably even untenable to argue that certain grounds are more serious (or more equal) than the rest.

In other words, it may not be possible to argue that violation of Section 8 is a minor ground compared to other so-called “substantive” grounds such as novelty or obviousness. Specifically, it may not be possible to argue that the “may” is a “shall” for certain grounds, but remains a “may” for certain other grounds.

Further, there are two sub-grounds within Section 64(1)(m) itself, namely:
A. that the applicant for the patent has failed to disclose to the Controller the information required by section 8; or
B. that the applicant has furnished information which in any material particular was false to his knowledge

These two grounds refer to two different circumstances. In the first circumstance, there is a failure on the part of the applicant to disclose information sought under Section 8. Specifically, the failure must relate to details of foreign application sought in Form 3. Such failure need not be deliberate or calculated. There just needs to be failure to disclose. Therefore, it could be said that the scope of analysis is restricted to establishing whether or not there was a failure to disclose by the applicant.

Before we jump to any conclusion, it needs to be pointed out that what amounts to “failure to disclose” is a subjective enquiry based on what constitutes sufficient disclosure under Section 8. It could also be argued that subjectivity allows for exercise of discretion. However, the exercise of discretion is limited to evaluating the adequacy of disclosure, and no more. If the applicant has disclosed the details sufficiently as sought in Form 3, there is no question of violation of Section 8.

However, if the disclosure is less than adequate, it must be concluded that the applicant/patentee has indeed violated Section 8. Once this conclusion is reached, there appears to be no more room for exercise of discretion. In other words, once failure to disclose is established, the “may” in the preamble to sub-section (1) of Section 64 cannot be used to further exercise discretion. Revocation appears to be the only legal and  logical course of action.

As regards the second circumstance which refers to willfully furnishing false information, it is clear that there must be a positive act on the part of the applicant to supply information which he knows to be false in a “material” way. Simply put, the false information must necessarily have a bearing on the decision of the Controller to grant or refuse a patent. Obviously, in this circumstance, the Controller has the power to exercise his discretion to understand whether the false information was “material” in any way to the outcome of the examination process.

To summarize, on a strict reading of relevant portions of Section 64(1)(m), it could be argued that there does not exist a room for exercise of discretion once failure to disclose information under Section 8 is established. Therefore, since the Learned Single Judge had arrived at a finding of contravention of Section 8 by the patentee, I don't think the Court had the option of not revoking the Erlotinib patent.”
Applying this logic to the Phillips case, it could be said that the Plaintiff’s patent is liable to be revoked for failure to disclose information in light if its own admission. However, it must also be noted that such revocation was being sought summarily under Order 12 Rule 6. Therefore, given the grave implications for the patentee, a Court would not be wrong in coming to the conclusion that the issue deserved deeper analysis at trial.

Now let us see what the Division Bench had to say. In paragraph 25, the Court notes, based on the affidavit of the Plaintiff's patent agent, that certain information was inadvertently omitted/not disclosed by the Plaintiff’s patent agent to the Indian Patent Office, despite having received the information from the Plaintiff. In such a situation, the Court ought to have held that only at trial it may be understood as to whether the failure of a patent agent to disclose information amounts to failure of the patentee to furnish information under Section 8. This would have been a better issue to frame and decide. Instead, in paragraph 27 of the decision, the Court goes on to observe that the issues that need to be looked into at trial are the alleged suppression and the materiality of the suppressed information. In my humble opinion, although the Court was perhaps correct in taking the view that the issue deserved a trial, it has erred in its appreciation of Section 64(1)(m) and the latter's application to the facts of the case. Simply put, the conclusion may be correct but the reasoning is flawed.

The Division Bench then dwelt on the interpretation of the word ”may” in Section 64(1). Based on a host of precedents, the Court took the view that the “may” was indeed a may which has the consequence of conferring discretion upon the Court while exercising the power of revocation. On this too, I humbly disagree with the Court as stated in my earlier post, the “may” in Section 64(1) is applicable equally to all 14 grounds of revocation which are enumerated under Section 64(1). Therefore, it would be difficult and probably even untenable to argue that certain grounds are more serious (or more equal) than the rest. In other words, it may not be possible to argue that violation of Section 8 is a minor ground compared to other so-called “substantive” grounds such as novelty or obviousness. Specifically, it may not be possible to argue that the “may” is a “shall” for certain grounds, but remains a “may” for certain other grounds.
Although testy, I’d like to volunteer with another argument. The Indian Patents Act, 1970 perhaps is inspired by its British counterpart and the use of “may” in certain instances in British English is synonymous with “shall”. In other words, the use of the word “may” is meant to be assertive or in the form of a directive, with no room for exercise of discretion. This must be considered in interpreting the language of the Indian statute. Therefore, given that the “may” used in Section 64(1) applies to both substantive and procedural grounds, it may not be possible to selectively construe the “may” as “shall” for substantive grounds and “may” for procedural grounds.

From the above, it is clear that although in the facts of the case perhaps a trial was necessary, the DB’s interpretation of Sections 8, 64(1) and 64(1)(m) do not do justice to the express language of the provisions and intent of the Legislature. Critically, this is bound to affect the adjudication of the appeal in the Roche-Cipla case where Section 8 has been agitated vigorously by the defendant Cipla. In that case, although the Learned Single Judge concluded that the patentee had violated Section 8, his Lordship ruled that the "may" in Section 64(1) allowed him to not revoke the patent despite the violation. Therefore, the DB's decision could deprive Cipla of an otherwise legitimate ground of appeal. I, for one, will wait to see how the DB's decision is applied in pending matters by Courts and the IPAB.