UPCOMING FICCI-DIPP-WIPO Conference for Industry and Policy makers

Pls. note that Federation of Indian Chambers of Commerce and Industry (FICCI) in association with World Intellectual Property Organization (WIPO) and Department of Industrial Policy and Promotion (DIPP), Government of India is organizing a Conference on Development and Intellectual Property (IP): Building Synergies with Policy Makers and Industry at Taj Exotica, Goa from September 1 to 3, 2008. This conference is meant for Industry Leaders, IP professionals/Experts, Legal practitioner and Policy makers. It would be worth attending this conference in case you wish to know about the issues of concern to the Industry and about the steps Government is taking to address them; to get an international flavor of experiences with respect to IP laws and sectoral issues (such as pharmaceuticals, IT, etc.); to learn about the strategies and best practices being adopted by stakeholders in using IP as a business tool. This conference also aims to highlight the emerging issues in effective enforcement of IP issues & strategies/emerging technologies to combat the menace of counterfeiting and piracy. The details about the conference, participation fees, boarding & lodging in Goa have been provided in the attached Brochure. This is the tentative Programme copy and the registration form. For further information you can touch base with Sheetal Chopra (sheetal.chopra@ficci.com), Senior Assistant Director – FICCI IPR Division or P L Sharma (plsharma@ficci.com), Executive Assistant (Ph: 23738760-70 Extn. 212, Direct: 23736306).

Abbott Files Para IV Litigation Against Dr. Reddy's Labs

Abbot Laboratories has filed an infringement lawsuit against Hyderabad-based Dr. Reddy’s Laboratories for the infringement of US Patent Nos. 6,511,678, 6,528,090, 6,713,086 and 6,720,004 following DRL paragraph IV certification as part of an abbreviated new drug application (ANDA) to manufacture a generic version of Depakote ER (divalproex sodium extended release tablet). Depakote ER is anti-seizure drug with US sales of $1.48 billion in 2007. The lawsuit is filed in the United States District Court for the District of New Jersey. In 2005 and 2007, Abbott filed similar infringement lawsuits against Mylan, Impax Laboratories, Teva and Wockhardt Ltd. but earlier this year entered into agreement with Mylan to allow launching a generic version no later than January 1, 2009. Mylan believes to have 180-day exclusivity period for 500 mg strength and under terms of agreement also obtained a license for the 250mg strength tablets to be launched no later than January 1, 2009.

Will it be Raining Patent Litigations in India?

Last edition of IDMA Bulletin (Vol. XXXIX No. 25) has interesting piece of advertisement from Cipla announcing brand names of 20 generic drugs likely to be introduce shortly. Just for the information of overseas readers, in India (unlike the US) generic companies sell generic versions under their own brand names. Here also, the list advertised by Cipla is of brand names not generic names so there is always a possibility of error in identifying the exact drug substance from brand name but still few brand names seems to closely resemble the generic names. The list includes brand names like Soranib (resembling Bayer’s anti-cancer drug Sorafenib), Sunitib (resembling Pfizer’s anti-cancer drug Sunitinib), Sprydas (resembling Bristol-Myer’s anti-cancer drug Dasatinib marketed as Sprycel), Lapanib (resembling Glaxo’s anti-cancer drug Lapatinib) and Nilotib (resembling Novartis’s anti-cancer drug Nilotinib). All these anti-cancer drugs belong to the same class of Tyrosine Kinase Inhibitors and for which either patent applications are pending or patents are granted in India (see here). Bristol-Myer has already received the Indian Patent No. 203937 for Dasatinib and last year Delhi Patent Office granted Pfizer the Indian Patent No. 209251 for Sunitinib. If Patent Circle guess about brand names is proper then possibly it will be raining patent litigations in India? It seems to be like Erlotinib (Tarceva), Cipla will again go ahead disrespecting patents for other anti-cancer drugs. Watch out … Roche may have company to join.

Teva Tasting Own Medicine

The world’s largest generic manufacturer Teva Pharmaceutical Industries instead of challenging Innovators’ drug patents will now be defending its own patented drug Copaxone against the Para IV certification made by Momenta and its partner Sandoz. Generically referred as Glatiramer Acetate, Copaxone is an anti-sclerosis drug that had US sales of $ 1.1 billion last year. Glatiramer is a biotech drug and Teva firmly believes that it would be difficult product to replicate and will require full clinical trials to get approval for the generic Copaxone. Teva said it intended to sue Momenta and Sandoz for alleged patent infringement of Orange Book listed patents. There are seven OB listed patents (US 5,981,589, US 6,054,430, US 6,342,476, US 6,362,161, US 6,620,847, US 6,939,539 and US 7,199,098) covering active ingredient Glatiramer Acetate, pharmaceutical compositions containing it, and methods of using it.

Federal Circuit Ruled Against Apotex Reverse Doctrine of Equivalents

The Federal Circuit has disagreed with Apotex that a district court erred in failing to find non-infringement under the reverse doctrine of equivalents and upheld the district court decision granting summary judgment that Roche’s US Patent No. 5,110,493 is valid and infringed by Apotex’s ANDA for generic version of anti-inflammatory eye drug Acular LS. Acular LS is an ophthalmic solution containing ketorolac tromethamine marketed by Allergan for the treatment of inflammation associated with glaucoma, conjunctivitis and eye surgery.

The ‘493 patent claims an ophthalmic formulation comprising a non-steroidal inflammatory drug, a quaternary ammonium preservative, and the non-ionic surfactant, octoxynol 40 (O40). In its Appeal, Apotex did not dispute that its ANDA falls within the literal scope of claim 1 of the ‘493 patent but instead argued that the district court erred in failing to find non-infringement under the reverse doctrine of equivalents. The Federal Circuit explained that the reverse doctrine of equivalents (“RDOE”) “is an equitable doctrine designed to prevent unwarranted extension of the claims beyond a fair scope of the patentee’s invention.” The court referred to Supreme Court’s RDOE test, set forth in the Graver Tank case:

Where a device is so far changed in principle from a patented article that it performs the same or a similar function in a substantially different way, but nevertheless falls within the literal words of the claims, the reverse doctrine of equivalents may be used to restrict the claim and defeat the patentee’s action for infringement.

Apotex argued that the ‘principle’ of the ‘493 patent is “the use of O40 in an amount sufficient to cause the formation of micelles and thereby provide robust stability to the formulation by preventing interactions between ketorolac tromethamine and benzalkonium chloride.” The Federal Circuit disagreed and found no support for this principle in the specification, prosecution history or prior art. According to the Federal Circuit, Apotex relied exclusively on the declaration of its expert and agreed that Apotex failed to make out a prima facie case of non-infringement under the reverse doctrine of equivalents, and therefore summary judgment of infringement was proper. The Federal Circuit also agreed with the district court that Apotex’s invalidity arguments were barred by claim preclusion (e.g., res judicata).

Playing Double Standards?

Often accusing foreign MNCs for ever-greening of patent protection, Cipla has filed fair number of patent applications for new forms of known drug substances such as Alfuzosin, Tolterodine, Perindopril, Citalopram, Fexofenadine, Levosulbutamol, Sibutramine, Topotecan, Clopidogrel, Duloxetine, Montelukast, Olanzapine. Over the years, Cipla has successfully pioneered reverse-engineering of innovator drugs with an ability to launch generic versions within shortest possible time. This business strategy not only made Cipla a preferred choice for cheap generic drugs but also transformed into Billion Dollar Company. Though Cipla lacked any expertise in drug discovery or research but went ahead challenging the validity of Tarceva patent under section 3(d) arguing that Erlotinib is a mere derivative of known drug (Gefitinib). I wonder do reverse-engineering expertise gives sufficient insight to complex drug discovery and make such statement (which essentially requires strong research experience and scientific evidence). It is almost like a chemistry department of third-tier University questioning research ability of premier National Chemical Laboratory (NCL) or Indian Institute of Technology (IIT). Interestingly, Cipla recently got patent for inclusion complex of esomeprazole with cyclodextrin, which technically is a case of frivolous patenting but instead they booked Roche for frivolous patenting of Erlotinib. In India, there seems to be case evolving for ‘differential non-obviousness’ and why not Cipla is not innovator and at their level of expertise any patent application filed by them (though how obvious that is) is non-obvious but when it comes to copying of innovator drugs everything under the sun is obvious.

AstraZeneca Wins Summary Judgment

AstraZeneca has been granted summary judgment for no inequitable conduct in Seroquel patent litigation and strategically avoided running into expensive and time-consuming expert discovery trial that was scheduled to begin on August 11 against the generic manufacturers Teva Pharmaceutical Industries and Sandoz. Teva and Sandoz had already conceded infringement and the validity of the ‘288 patent, leaving only inequitable conduct contentions. Teva said it plans to appeal the judgment by the US District Court for the District of New Jersey. AstraZeneca sued Teva in September 2005 for willful infringement of Orange book listed US 4,879,288 protecting Seroquel drug substance Quetiapine Fumarate. The lawsuit was in response to an Abbreviated New Drug Application filed by Teva with the United States Food & Drug Administration seeking marketing approval of generic Seroquel before the expiration of the ‘288 patent. Later in April 2007, AstraZeneca sued Sandoz following submission of an Abbreviated New Drug Application by Sandoz intended for marketing approval prior to the expiration of the ‘288 patent. In February 2008, AstraZeneca filed a motion for summary judgment that the ‘288 patent is not obvious and that there has been no inequitable conduct.

More Patents for New Forms Issued to Generics

There are some more patents issued by the Indian Patent Office to generic companies for new form of known drug substances.

1. Teva Pharmaceutical Industries received Indian Patent No. 210420 for novel hydrate forms of alendronate sodium having water content of 1.35% to 11.7%. Patent was issued last year in October by the Mumbai Patent Office against the application no. 497/MUMNP/2005 which is national phase application of WO 2000/012517. The WO disclosure do not made any data suggesting improved efficacy over the known substance.
2. Indian Patent No. 219014 issued to Torrent Pharmaceuticals Ltd. for Form T1 of nebivolol and its pharmaceutically acceptable salts against the mail-box application no. 811/MUM/2004. The patent issued earlier this year in April. Equivalent WO 2006025070 does not disclose any data suggesting improved efficacy over the known form.
3. Indian Patent No. 212951 for polymorph Form I and 2 of desloratadine hemifumarate issued to Sandoz against the application no. 139/CHENP/2005 which is national phase application of WO 2004012738. The WO disclosure gives no data suggesting improved efficacy over the known form.
4. Indian Patent No. 219489 for amorphous and crystalline forms of losartan potassium issued to Teva Pharmaceutical Industries against the mail-box application no. 1286/DELNP/2004 which is national phase application of WO 2003048135. The WO disclosure does not suggest any data relating to improved efficacy over the known form.

Note: Above information is based on title and abstract available on official website of Indian Patent Office not on issued claims.

Daiichi Filed Infringement Suit Against Indian Drug Company

Daiichi Sankyo which recently shocked Indian generic industry by announcing to buy out controlling stake in India’s largest drug company Ranbaxy has lately filed an infringement suit in the United States District Court for the District of New Jersey against Matrix Laboratories for alleged infringement of the US Patent No. 5,616,599 (the ‘599 patent) claiming active ingredient olmesartan medoxomil. The infringement suit is in response to Matrix’s submission of an abbreviated new drug application (ANDA) to the United States FDA, seeking approval to market generic version of anti-hypertension Azor tablets containing the active ingredients amlodipine besylate and olmesartan medoxomil before the expiration of the ‘599 patent. The suit was filed on June 03, 2008. Matrix is believed to be First-to-File Para IV applicant, which if succeed would give Matrix 180-day market exclusivity.

Lipitor Settlement: What Lies Beneath? Part II

Strategically Lipitor settlement seems to be more favorable for Ranbaxy as this provides certainty for Ranbaxy to launch generic product in the United States without any patent hurdle and may allow recouping the expenses made in Lipitor litigation worldwide but what benefits Pfizer from settlement? Pfizer too avoided legal cost that would be spend further in litigation and importantly put an end to nightmarish litigation which witnessed the ‘995 patent going down.

What about 180-day market exclusivity?

Technically the 180-day market exclusivity will trigger soon after the expiration (March 2010) of the genus patent but Ranbaxy, under the terms of the agreement, would delay the launch until November 2011 which would possibly lead to forfeiture of Ranbaxy’s right to 180-day market exclusivity. 21 USC 355 (j)(5)(D) states that if the first applicant fails to market the generic product within 75 days from the date of FDA final approval of ANDA that will lead to forfeiture of 180-day exclusivity period. And in case of forfeiture, any later ANDA applicant may market its generic product upon receiving FDA final approval. Interestingly, if Ranbaxy forfeits its 180-day market exclusivity then the Lipitor generic space will open much earlier than the expected (that is before July 2010). However, it would still not be easy for any generic player to cross hurdles of Pfizer’s polymorphs and amorphous patents and step into Lipitor generic fortune. Pfizer not only litigated its patents strategically but possibly put an end to prized 180-day market exclusivity.

Lipitor Settlement: What Lies Beneath?

Historical patent litigation between world’s largest drug manufacturer Pfizer and world’s most aggressive generic company Ranbaxy over biggest ever blockbuster drug Lipitor has finally ended in unexpected climax with both Pfizer and Ranbaxy settling all their patent litigations worldwide. Under the agreement, Pfizer voluntarily licensed Ranbaxy to sell generic versions of Lipitor in the United States effective November 30, 2011. In addition, the agreement provides a license for Ranbaxy to sell generic versions of Lipitor on varying dates in seven additional countries: Canada, Belgium, Netherlands, Germany, Sweden, Italy and Australia. Thought the settlement is win-win for Ranbaxy and Pfizer but gives more strategic value to Ranbaxy. It would be really interesting to revisit and trace some of the facts and carefully look what lies beneath the historical settlement?

Pfizer’s Strategy was Ranbaxy’s Dilemma

It all triggered when Ranbaxy filed an abbreviated new drug application (ANDA) with the United States Food and Drug Administration seeking marketing approval for generic equivalent of Lipitor before the expiration of Orange Book listed patents. Pfizer sued Ranbaxy within statutory timelines (45 days) and filed civil action for alleged infringement in the District Court. During the course of litigation proceedings, Ranbaxy strongly challenged the validity of the US 5,273,995 patent and also questioned patent term extension awarded to the US 4,681,893 (genus patent). Alas Ranbaxy failed to convince the District Judge any of its arguments and lost to Pfizer. Ranbaxy appealed and this time CAFC partially reversed the district court judgment, invalidating the ‘995 patent. CAFC ruling gave Ranbaxy the grandest legal victory by any generic company in the United States and importantly entitlement to 180-days market exclusivity. This mean that Ranbaxy’s precious 180-days market exclusivity will be triggered soon after the expiration of the genus patent. Though most of the business and news analysts predicted that Ranbaxy will be able to bring generic equivalent soon after expiry of the genus patent but it was not that easy for Ranbaxy to breakthrough ‘Lipitor generic space’ even after knocking down the ‘995 patent. Till here, Pfizer strategically avoided Ranbaxy from suing for other orange book and non-orange book listed patents covering different polymorph and amorphous forms. Probably Pfizer (legal team) thought waiting till Ranbaxy launches its generic equivalent and then sue for infringement of polymorph and amorphous patents. This strategy not only would hinder Ranbaxy’s generic equivalent but also may give Pfizer an opportunity to claim treble damages against the willful infringement. Though Patent Circle is not sure whether Ranbaxy used different form other then patented by Pfizer and planned declaratory judgment for non-infringement prior to launch of its generic equivalent or was planning to challenge the validity of Pfizer’s patents for polymorph and amorphous form but what is sure that Pfizer would have hunted down Ranbaxy for polymorph and amorphous patents.

Patent Circle believes that Pfizer strategically litigated Lipitor against Ranbaxy and kept polymorph and amorphous patents out of Para IV litigation so that Pfizer may unfold them in separate litigations. Pfizer not only used patents against Ranbaxy but also in parallel strategically filed a citizen petition with the United States FDA regarding amorphous atorvastatin. In its petition, Pfizer concerned about higher levels of impurities and inferior stability of other polymorphs and amorphous forms that may be used by generic companies. Pfizer also stated that the pending application for a generic version is in an amorphous form (though not mentioned the name of company but was possibly referring to Ranbaxy ANDA). In March 2008, Pfizer extended its strategy by filing fresh infringement suit against Ranbaxy for infringement of two non-orange book listed patents – US 6,087,511 and US 6,274,740 both covering processes for the preparation of amorphous Atorvastatin which suggest that Ranbaxy possibly used amorphous atorvastatin calcium for their proposed ANDA. The process patents are due to expire in July 2016 and would mean that if Pfizer succeeds in wining the litigation that would delay Ranbaxy’s generic product till 2016. This litigation put Ranbaxy in dilemma whether to launch generic soon after the expiration of genus patent with a possible risk of treble damages or wait till litigation get over but that may possibly risk of running out 180-days market exclusivity without even launching the generic product for which Ranbaxy played such a risky game. Pfizer’s Strategy was Ranbaxy’s Dilemma.

To be continued …

Cipla Patents Salt and Complex of Blockbuster Drug Substances in India

Mumbai-based Cipla has lately obtained patents for new form of two blockbuster drug substances, namely, esomeprazole and alendronate. In past, Cipla has constantly accused foreign MNCs for ever-greening of patent monopoly and strongly opposed patenting of so-called trivial improvements but in general practicing the same in India. In April 2008, Mumbai Patent Office issued Patent no. 219034 to Cipla for inclusion complex of esomeprazole with cyclodextrins which technically should fall under section 3(d) of the Patents Act, 1970 (that is complexes of known substances). Surprisingly the search report (ISR) of equivalent WO02098423 cited one ‘X’ category reference and eleven ‘Y’ category references against the novelty and non-obviousness of the invention but still Cipla managed to get patent in India. Though Patent Circle went through the WO equivalent but couldn’t find any data suggesting and relating to enhanced or improved efficacy. Also in April 2008, Mumbai Patent Office issued Patent no. 219022 for alendronate monosodium salt which also falls under section 3(d) (that is salt of known substances). In this case also the search report (ISR) of equivalent WO03033508 cited five ‘Y’ category references against the non-obviousness of the invention. Patent Circle also scanned the disclosure of WO equivalent but yet again couldn’t find any data suggesting and relating to enhanced or improved efficacy. Surely it would be really interesting to know on what basis Cipla managed to overcome the efficacy barriers under section 3(d). Unfortunately, Indian Patent Office (IPO) has ill-practice of issuing patent in India if patent for same invention is granted in other country particularly Europe and US and that also without giving any considerable thought. Possibly Cipla too provided copy of granted European/US patent to have patents issued by the Mumbai Patent Office.

Often public health interest organizations criticized patenting of polymorphs or other forms of known substances (considering such improvements as trivial modifications) and keep targeting foreign MNCs of being patent freaks but why avoided same practice against the Indian companies. The only reason they may give that the foreign MNCs will charge excessive price for patented drugs whereas domestic companies will not. Interestingly last year Cipla received Government notice demanding Rs. 24.23 crore for alleged overcharging on antibiotic ciprofloxacin during the period April 2006 to March 2007. Earlier Cipla also received similar notices from the National Pharmaceutical Pricing Authority (NPPA) demanding as estimated Rs. 941.92 crore for alleged overcharging till March 2006 for five drugs, namely, Salbutamol, Theophylline, Ciprofloxacin, Norfloxacin and Cefadroxil. Just note this overcharging is for generic drugs what if Cipla start marketing and pricing patented drugs. Anyhow bottom line of any business is profit (not public health) and it seems difficult to predict whether NGOs are more confidants to Indian generic companies or to public.

Indian Generics & Health Activists Having Problem Over Patent Titles

Business Standard reported that domestic drug companies and public health activists have accused research-based multinational drug companies of not providing clear information about the type or use of the potential new medicines in patent applications. Also accusing the practice of using complex chemicals, or molecular formulae, in place of clear indicators as patent titles as an attempt to hide the identity of the actual molecule. A Mumbai-based patent expert said, “There are instances of patent title merely mentioning the invention as ‘a novel compound’ or a ‘new pharmaceutical substance’. By doing so, the companies are trying to avoid detection of the actual nature of their products. The Indian patent law has, in fact, considered this factor while saying (in section 10) that the title of the patent application and the patent abstract that follows should describe the product, its use and explain its contents.” Further adding, “However, these rules are often broken than followed.” Addressing the issue, the Indian Pharmaceutical Alliance (IPA) insists that all applications for pharmaceutical substances should indicate the INN of the substance as the title of the patent.

Every year, the list of problems by domestic drug companies and public health activists seems to be increasing. Earlier, they had problem with (1) introduction of patent protection for pharmaceutical and drug products, (2) (triggering) period for compulsory license, (3) patent office issuing patent for mail-box drug applications (without giving hearing during pre-grant opposition) and latest is patent titles. I too search and track Indian patents/published applications for drug compounds/pharmaceutical products but surprisingly never faced any confusion/difficulty in locating through patent titles. In most of the cases where patents are issued for salts and polymorphs, INN or chemical name of the drug substance is mentioned. As far as new drug compounds are concerned, how someone can expect to have INN placed in patent title, considering by the time patent application is filed for new drug compound the applicant has not applied/received the INN from WHO. I do agree that sometime it is difficult to locate the clear indication (therapeutic application) by reading title such as ‘a novel compound’ or ‘a new pharmaceutical substance’ but in such case, a searcher, may try to out international classification and/or locate equivalent foreign application (using priority application data).

There is no point in accusing MNCs for such issue. They provide whatever they feel appropriate but under section 10 (4)(d) of the Patents Act, 1970 the Controller of Patents also have an option to amend the abstract for providing better information to third parties. If MNCs fails in providing abstract in a manner to facilitate searching then it is duty of Controller to do so (or ask applicant to do so).

Controller Decisions Goes Public - Part 2

Online availability of Controller’s decision and availability of abstracts of patent applications published after 18 months, enhanced user-friendliness of E-filing gateway etc. reveals that the Consultative working group constituted by FICCI and DIPP has proved to be very effective platform in making the patent offices more responsive to industry needs. The Consultative working group set by FICCI’s IPR division brings to Government’s notice issues of concerns for Industry w.r.t Indian Patent System. Sheetal Chopra (sheetal.chopra@ficci.com), Senior Assistant Director – FICCI IPR Division, through a short interview, stated that DIPP is providing all its support to FICCI in bringing the working of Patent office at par with International Standards.

I am sure that we all will witness many more initiatives taken by the Consultative Group leading to enhanced effectiveness of Indian Patent Offices and in bringing more transparency in their working.

Let us all join hands with FICCI by providing/highlighting issues of concern to each one of us and make deliberations of Group meetings successful.

Press Release: National IPR Campaign Announced

The rapidly growing relevance of intellectual property in the present knowledge driven economic development has led the Government to take several initiatives both in the legislative domain as well as the administrative set-up to create a modern and efficient Intellectual Property infrastructure in the country. Recognizing the critical importance of IP systems for the growth of Indian Industry and to create larger public awareness and further enhance the capacities of Indian patent office and enforcement authorities, FICCI and Department of Industrial Policy and Promotion (DIPP), Government of India have launched “National IPR Campaign”. Under the Campaign, FICCI and DIPP will jointly conduct seminars, workshops and specialized training programmes over a period of one year from April ’08 to March ’09. The Campaign would include awareness programmes on Intellectual Property issues; capacity building Programmes for enforcement authorities and the staff of Controller General of Patents, Designs and Trade Marks (CGPDTM); specialized orientation programmes for patent office examiners; programmes on sensitizing judiciary on speedy and quality adjudication of Intellectual Property cases; continuos advertisements in electronic and print media on “protecting IP and the consequences of violating IP Rights”; establishment of “Knowledge and Education Centres” at all Patent Offices; targeted programmes for stakeholders with a view to shift the current practice of filing patent/trademark applications from paper to electronic mode etc. The campaign will not be limited to big cities alone but will also be taken to tier II and III cities including Baddi, Meerut and Jaipur by FICCI.

For any further information pls. contact sheetal chopra (sheetal.chopra@ficci.com), Senior Assistant Director, FICCI-IPR Division.

Controller Decisions Goes Public

Indian Patent Office (IPO) has lately made Controller’s Decisions public by making an online search provision to search any of his decisions. Visit Indian Patent Office Patent Decision Search link. The search page is not that of global standards but still good enough to search. The decision can be searched using search condition restricted by any of the six options, (1) Patent Number, (2) Section, (3) Opponent, (4) Controller, (5) Application Number, and (6) Applicant Name.

IPO also made search option available for patent applications published under section 11A (18 months publication). Check link. However, search results are restricted to patent bibliographic details (more or less similar to details published in Patent Gazette), not full-text patent applications.

Section 107A (b): As clear as mirror Part 2

Section 107A (b) of the Patents Act, 1970 allows provision for parallel importation. Parallel importation allow products produced genuinely under the protection of a “parallel” intellectual property right (such as patent, trademark or copyright), placed into circulation in one market, and then imported by an intermediary (parallel importer/trader) into a second market without the authorization of the local owner of the intellectual property right. Such imported products are called parallel imports and such cross border trade is called parallel trade. However, parallel imports do not include counterfeited or pirated (generic) products.

As illustration, consider an antidiabetic drug Sitagliptin patented by Merck in India and Argentina. A parallel importer can import antidiabetic Sitagliptin tablets in India, sold in Argentina by Merck (or with his consent), from authorized Argentine wholesalers/retailers without the authorization of the Indian patentee (Merck), but parallel importer cannot import Sitagliptin tablets manufactured by Argentine generic companies.

In 2005, the Patents Amendment Act 2005 amended section 107A (b) to bring in full advantage with the principle of parallel importation. Old provision, before amendment, stated –

“(b) importation of patented products by any person from a person who is duly authorized by the patentee to sell or distribute the product,”

The old provision though allowing parallel importation, but was restricting parallel importers to import patented products only from a person who is duly authorized by the patentee to sell or distribute the product. In other words, under old provision parallel importer was prevented from importing patented products from resellers such as wholesalers, retailers and pharmacies who brought the products from patentee distribution channel and are free to use and resell further without restriction from patentee.

New provision, after amendment, states –

“(b) importation of patented products by any person from a person who is authorized under the law to produce and sell or distribute the product,”

The new provision now removed the earlier restriction of importing the patented products only from a person who is duly authorized by the patentee to sell or distribute, but also include to cover resellers such as wholesalers, pharmacies and retailers. Wholesalers, retailers and pharmacies are licensed by the government and authorized under the law to sell and distribute the drug products. In other words, the new provision has broadened the scope of older provision and has amended to take full advantage of importation exemption.

According to new provision, importation of patented products by any person from a person who is duly authorized under the law to produce and sell or distribute the product will not be considered as an infringement of patent rights.

Here ‘patented product’ interprets a product protected by Indian patent (Indian Jurisdiction), not by a patent outside India (other jurisdiction). There is no confusion in this as section 107A (b) is exemption to infringement of Indian patent, not foreign patent as we can not regulate infringement in other jurisdiction.

Here ‘duly authorized under the law’ interprets authorized under the law of exporting country. There is also no confusion in this as section 107A (b) is exemption provided to a parallel importer against infringement of Indian patent, and if someone is already authorized under the Indian law to produce and sell or distribute the patented produce then what made him to seek immunity under section 107A (b).

After new provision, I do not see any confusion or loophole in section 107A (b) and would not be reluctant to say that section 107A (b) stands as clear as mirror.

Section 107A (b): As Clear as Mirror

Under Indian patent law, a patentee has exclusive right to prevent third parties, who do not have his consent, from the act of making, using, selling, offering to sale or importing patented product in India till patent is valid and enforceable. If third party indulges in any of these act that will constitute an act of infringement and the patentee (or its authorized licensee) has a right to trigger an infringement suit against the third party. But there are certain instances which though constitute infringement but will not be considered as infringement under the Patents Act, 1970 and referred as exemptions. Such instances can also be used as defences in suits for infringement. Section 47 and 107A relates to exemptions provided under the Indian patent law. Section 47 particularly covers (a) research (experimental use) exemption and (b) government use exemption whereas section 107A relates to (a) regulatory (bolar-type) exemption and (b) importation exemption. The exemptions provided in section 107A are result of flexibilities provided under TRIPS Agreement (Article 6 and Article 30). However, herein we are only going to discuss about importation exemption.

Possession to Market

Technically, patent is a legal document (certificate) issued by the government to an applicant for an invention that gives the applicant: (1) a right to prevent unauthorized third party from making the patented invention, (2) a right to prevent unauthorized third party from using the patented invention, (3) a right to prevent unauthorized third party from selling the patented invention, (4) a right to prevent unauthorized third party from offering to sale the patented invention, (5) a right to prevent unauthorized third party from importing the patented invention, and (6) importantly a right to file an infringement suit against the unauthorized third party infringing any of the above right (1) to (5).

In other words, a patent gives an applicant bundle of exclusive rights to control the commercial activity of patented invention. Till the patentee is having patented products in his possession (not placed on the market) all of these rights are intact with the patentee, that is, patentee has sole discretion to commercialize the patented products whenever he want, whosoever he want, wherever he want and whatever price he want. However, when the patented product is first sold or marketed by the patentee (or with his consent) it ceases patentee’s certain exclusive rights on the patented product. In other words, once the patentee has been able to obtain a commercial return from the first sale or placing on the market, the purchaser of patented product is free to use and resell it without further restriction from patentee.

As illustration, consider an anticancer drug Tarceva protected by an Indian patent. Because Roche holds patent rights on that drug, it may prevent others from first-selling the anticancer Tarceva without his consent. If you buy 25 strips of Tarceva tablets from an authorized first-seller, Roche’s right in its patent is ceased, and it cannot prevent you from using the sold tablets, or from giving or re-selling to others. The patentee has lost its right to control further movement of the sold tablets. Your purchase of the Tarceva tablets does not authorize you to begin making your own generic version of Tarceva, or licensing the patent to others. In other words, the first sale does not grant you rights in the patent, but rather extinguishes Roche’s exclusive right to prevent further movement of those particular sold tablets. This phenomenon is referred as doctrine of exhaustion which can further be attributed as international and national exhaustion.

If a country recognizes doctrine of national exhaustion, a patentee’s right to prevent movement of a patented product is only extinguished by the first sale or marketing of a patented product within the territory of that country. In other words, national exhaustion does not allow the patentee to prevent third party from using and reselling patented products already sold or put on the domestic market by the patentee or with his consent. If a country recognizes a doctrine of international exhaustion, a patentee’s right to prevent movement of patented product is extinguished when a patented product is first sold or marketed anywhere in the world. Notably, the WTO member countries are free to incorporate doctrine of exhaustion under Article 6 of the TRIPS Agreement. The policy of exhaustion significantly affects the flow of patented products across borders. Under doctrine of international exhaustion, patented products flow across borders after have been first sold or placed on the market by the patentee or with his consent anywhere in the world. Under doctrine of national exhaustion, the movement of patented products across borders may be blocked by patentees.

As illustration, United States adopted doctrine of national exhaustion whereas Canada and India adopted international exhaustion. Consider an antiretroviral drug Selzentry protected by patent in US, Canada as well as India. Because Pfizer holds patent rights on that drug, it may prevent others from first-selling and importing the antiretroviral Selzentry without his consent. Pfizer sells Selzentry tablets to an Indian pharmacy and this exhausts Pfizer’s right to prevent use or resell of sold tablets. Under international exhaustion, a Canadian company Apotex may import Selzentry tablets from that Indian pharmacy without the consent of Pfizer having Canadian patent and resell in Canada at lower price. But under national exhaustion, a US company Barr cannot import Selzentry tablets from Indian pharmacy and resell in US at lower price because Pfizer’s patent rights within the US are not exhausted by virtue of sales outside the US. This phenomenon of importing patented drugs from across the borders after have been first sold or placed on the market by the patentee is referred as parallel importation.

If an importing country agrees to international exhaustion, a third party may import a product patented in importing country from anywhere in the world where the product is first sold or marketed by a patentee or with his consent. Thus, the concept of exhaustion is critical in the context of parallel importation and possibility of importation can only be there when a (importing) country agrees to doctrine of international exhaustion.

Section 107A (b): In Compliance with Principle of Importation

To be continued …

Mint Reported Irresponsibly

Indian newspaper Mint has recently covered a lose story related to section 107A (b) of the Patents Act, 1970 and to utter surprise was a major irresponsible reporting seen in recent times. Mint reported that section 107A (b) allows local Indian companies to import patented drugs in India by manufacturing in least developing countries such as Bangladesh without any authorization of patent holder. Shocking interpretation! Mint also pointed out that Indian drug makers have rushed to take advantage of this, and several of them have even started working on building manufacturing plants in these countries and further adding that this provision may not be in complete compliance with the international trade rules of WTO and even may violate Indian patent law. But surprisingly what Mint completely missed pointing out is what this section (provision) is all about. It is always important that while reporting on critical issue such as section 107A (b) complete background research should be made. So let’s scrutinize what section 107A (b) really stands for and how wild is the interpretation made by Mint.

Rights & Exemptions

Section 48 of the Patents Act, 1970 gives patentee an exclusive right to prevent third parties, who do not have his consent, from the act of making, using, offering for sale, selling or importing patented product in India. If third party indulges in any of these act, that will amount to infringement of patent right under the Indian patent law. But there are certain instances which though infringing are not considered infringement under the Act. Such instances are often termed as exemptions, which are derived from judiciary-created doctrines (usually US and European judiciary) and section 107A covers two of such exemptions. Both these exemptions are result of flexibilities provided under TRIPS agreement (Article 6 and Article 30). Clause (a) of section 107A relates to regulatory exemption famously known as Bolar-type exemption whereas clause (b) relates to parallel importation. Now before discussing section 107A (b) in detailed, let’s discuss two important aspects: (1) Exhaustion of Rights, and (2) Parallel importation.

Exhaustion of Rights

As referred earlier that Patentee has exclusive right to prevent third party from making, selling, offering for sale, selling or importing patented product. According of doctrine of exhaustion, once a patented product has been marketed by the patentee or with his consent, the patentee will exhaust certain rights on the product. Particularly, patentee will exhaust right to prevent the resale, importation or exportation of the patented product that have been placed on the market. In simple words, once a patented product has been marketed by the patentee or with his consent, the patentee cannot prevent third party from resale, importation or exportation of the product. Importantly, exhaustion can further be attributed as international and national exhaustion.

National exhaustion does not allow the patentee to prevent third party from resale and importation of patented products put on the domestic market by the patentee or with his consent. In case of international exhaustion, the patentee rights are exhausted once the product has been sold by the patentee or with his consent in any part of the world. Article 6 of TRIPS Agreement leaves countries free to incorporate the principle of exhaustion of rights. Different countries regulate the applicability of the doctrine of exhaustion in different ways. The concept of exhaustion is critical in the context of parallel importation.

Parallel Importation

Parallel importation is a practice where patented products are imported from another country without the permission of the patentee (or his authorized licensee). The practice of parallel importing occurs because companies often set differential pricing for their products in different markets. Parallel importers usually purchase products in one country at a price which is cheaper than the price at which they are sold in a second country, import the product into the second country, and sell the product in that country at a lower price. This practice of parallel importation is legal if the country in which patented products is imported agree to international exhaustion. However, if the country in which patented products is imported do not agree to international exhaustion and instead follow national exhaustion then such importation of patented products by third party will constitute infringement of patent.

Section 107A (b)

Clause (b) of section 107A allows parallel importation of patented products from other country. According to the provision a person can import patented product from a person who is duly authorized under the law to produce and sell or distribute the product. Person who is duly authorized under the law to produce and sell or distribute include patentee or his authorized licensees and licensed pharmacists/licensed drug retailers. But what is important to remember is that the patented drugs which are imported in India should be manufactured by the patentee or by a person duly authorized by the patentee, not by any generic company manufacturing without the consent of patentee. If patented drug is imported from a generic company, who do not have consent of patentee, then that will constitute infringement under the Indian patent law. However, patentee may still prevent parallel importation by using contractual restriction in distribution channel (often referred as implied license).

Check list of countries having international exhaustion.

IP Feathers - Value Innovation IP Services

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