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.”
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