Section 3(d): Speedbreaker or safety net for Indian pharma?

Sunita K Sreedharan, Advocate and Patent Agent, SKS Law Associates focusses on the context and interpretations of Section 3(d)

Every discussion on the recent trends in the Indian Patent law invariably veers towards a discussion on the Section 3(d) provision in Chapter II of the Patents Act 1970 ('the Act'). Ironically, when this section is read in tandem with the other provisions of the Act it appears to be rather innocuous and does not really merit another glance — till such time the patent examiners and the patent agents exercise their interpretation skills on the section! The context in which the interpretation is conducted is what gives the section all that meat and heat in every discussion worth its salt.

The Section 3(d) in reference to context

The reference to context for the interpretation of Section 3(d) goes back to the balancing act of a newly independent India in 1947 striving for self-sufficiency in the face of abject poverty of its teeming millions. When the young nation with an ancient history set out to build a modern nation, one of its chief aims was to attain economic independence. The nation-builders wanted a system that is self-sufficient wielding political and economic strength to sustain her people.

Post independence, a committee headed by Dr Bakshi Tek Chand was set up to examine the patent system prevailing under the Patents and Designs Act 1911, which submitted its report on 30th April 1950. The report observed that — "The Indian Patents System has failed in its main purpose, namely, to stimulate inventions among Indians and to encourage the development and exploitation of new inventions for industrial purposes in the country so as to secure the benefits thereof to the largest section of the public.” In April 1957, Justice Rajagopala Ayyangar committee appointed to advise on revision of the law relating to Patents and designs observed that foreigners held 80 to 90 percent of the patents in India which were only for the purposes of protecting their imports and not for manufacturing them in the country, thereby depriving the nation of reasonably priced goods. He recommended high consideration for public health concerns with grant of only process patents for drugs, pharmaceuticals and chemicals as well as wide compulsory licence provisions.

The Ayyangar Committee Report resulted in the passing of the Patents Act 1970, along with the Patent Rules 1972, which repealed the Patent related provisions in the Patents and Designs Act of 1911. Under the new Act, a section 5 was introduced that stated that food, medicines, drugs etc will be granted only process patents. While there will be both process and product patents in the other fields of technology, there will only be process patents for inventions in the fields of drugs, medicines, food, fertilisers and chemicals.

The result of implementation of Section 5 was to ensure the absence of product patents on drugs and medicines; which meant every new drug patented elsewhere could be legitimately reverse-engineered and developed in India by way of any process that was not patented. The impact on the Indian pharma scene and the health sector was immediate and significant. It resulted in the presence of a number of pharmaceutical companies that could quickly develop any drug new or old by every process that had not been patented. Since the drugs were not on patent, these could be made available in markets at very reasonable prices.

At this time in ‘the pre-patent-amendment era’, the original section 3(d) in the Patent Act 1970 read: ‘the mere discovery of any new property or new use for a known substance or of the mere use of a known process, machine or apparatus unless such known process results in a new product or employs at least one new reactant’ is not a patentable invention.

The message was very clear between 1972 to 2005 : a new use of a known substance is not patentable unless there is at least one new reactant. Whatever the state of the Indian Patent Offices at that time in the pre-modernisation era, the examination system strictly complied with this requirement of the Act.

TRIPS obligations and the Chapter II of the amended Patents Act

As a signatory to the Agreement on the Trade Related Aspects of Intellectual Property Rights (TRIPS), India became a member state effective 1st January 1995. Under the transition provisions India had a 10-year-window i.e. until 1st of January 2005 to amend its patents laws to grant patents in all fields of technology including food, drugs, medicines and chemicals.

Significantly, Articles 7 and 8 of the TRIPS Agreement permit member countries to adopt measures necessary to protect public health and nutrition, and to promote public interest in sectors of vital importance. Health and availability of reasonably priced drugs is definitely a sector of vital importance!

A series of amendments to the Act and the Rules in 1999, 2002, 2004, 2005 and 2006 resulted in the latest version of the amended Patents Act 1970. The Chapter I of the Act with the preamble and the definitions, is followed by Chapter II titled ‘Inventions not Patentable’ comprising of sections 3, 4 and the now abrogated Section 5.

Section 3 enumerates a rather long list (15 sub-sections in all as against the original 9) of subject matter that cannot be patented under the Indian system. This includes alleged inventions that are against natural laws, against public order, inventions pertaining to living form other than micro-organisms which means that micro-organisms are patentable provided they fulfil the basic patentability criteria of novelty, inventive step and industrial applicability. Section 3(k) bars the patenting of computer programme per se, business methods, while Section 3(i) barred treatment of humans and animals and so on. New subsections ensured that patents were not granted for traditional knowledge or indigenous knowledge whether in writing or in oral.

The interpretation of Section 3(d)

In this list of 15, the amended Section 3(d) opens a Pandora's box of interpretations and counter interpretations. Flanked by Section 3(c) and Section 3(e), which appear in a Chapter titled "Inventions Not Patentable", Section 3(d) does not lend itself to a favourable interpretation.

3(c) reads that ‘the mere discovery of a scientific principle or the formulation of an abstract theory or discovery of any living thing or non-living substances occurring in nature’ is not an invention.

Section 3(e) reads that ‘the mere arrangement and rearrangement or duplication of known devices each functioning independently of one another in a known way’ is not patentable.

Now to read Section 3(d)

"The mere discovery of a new form of a known substance which does not result in the enhancement of the known efficacy of that substance or the mere discovery of any new property or new use for a known substance or of the mere use of a known process, machine or apparatus unless such known process results in a new product or employs at least one new reactant.

Explanation: For the purposes of this clause, salts, esters, ethers, polymorphs, metabolites, pure form, particle size, isomers, mixtures of isomers, complexes, combinations and other derivatives of known substance shall be considered to be the same substance, unless they differ significantly in properties with regard to efficacy;"

For a better understanding of the Section 3(d) which may lend itself to a clarity in interpretation, it may be disassembled to read as

• The mere discovery of a new form of a known substance which does not result in the enhancement of the known efficacy of that substance or
• the mere discovery of
• any new property or
• new use for a known substance or
• of the mere use of a known process, machine or apparatus unless such known process
• results in a new product or
• employs at least one new reactant is not an invention.

Contrary to common perceptions therefore, the Section 3(d) applies equally to all purported inventions in all fields of technology. It is a fallacy that the section 3(d) is applicable only to the pharmaceutical/chemical cases.

The Explanation clause that follows this section 3(d) attempts to clarify that in understanding the term "substance" appearing in the main clause, the variants including salts, esters, ethers, polymorphs, metabolites, mixtures thereof etc (see above) and other derivatives of known substance shall be considered to be the same substance, unless they differ significantly in properties with regard to efficacy.

In a world which has evolved from an industrial economy to a largely knowledge based economy, there is little doubt that the know-how is the greatest asset of a company. Any valuation of a company today validates the fact that the most valuable assets of a company are its intellectual assets which include its trademarks, patents, copyrights, domain name, designs etc. A company's stock market value falls drastically when a block-buster drug goes off-patent.

It stands to reason then that tweaking of a successful patented molecules and presenting as a new molecule or making superficial changes to known inventions and presenting the same as a new invention could be advantageous to a company in terms of saving millions of dollars in the R&D of a new drug/molecule, the regulatory processes and marketing expenditure to introduce the new drug in the market. Findings of the US Federal Trade Commission in 2002, the Competition Bureau in Canada and the submissions of the Generic Medicines Industry Association to the Senate in Australia bear witness to the fact that the business strategy of ‘evergreening’ of a block buster drug patent is a ground reality that can have a disastrous effect on the pricing and availability of the drug in the market.

The transition of the patent regime in India from ‘process patent’ to ‘product patent’ is fraught with pitfalls which is more a business strategy than a legal option. The teething problems in the implementation, interpretation and enforcement of a newly drafted / amended law are every law-maker's nightmare.

The Novartis Case

The well documented Novartis case in the ‘Glivec’ matter has brought the Indian patent system and Section 3(d) into sharp focus. As a result the Intellectual Property Appellate Board (IPAB) became functional for patent related matters and the questions posed to the Judiciary begs clear answers, notwithstanding the observations of the Mashelkar Committee Report. The questions are:

a. What is ‘efficacy’ in the context of Section 3(d) and how is it to be measured for purposes of indicating ‘enhancement’ ?

b. How much information in a specification is enough information for purposes of Section 10 disclosure, especially where the market is very competitive?

c. What if the exact information on efficaciousness is available during clinical trials much after the patent specification is filed; can this information be submitted later by way of affidavit ?

d. Will this information by affidavit be considered as part of the complete specification or would it be read as beyond the scope of disclosed invention ?

Conclusion

There are definitely ways to overcome this dilemma of how much information is enough information for the purpose of grant of patent especially in the highly competitive world of pharmaceutical R&D. Maybe the answers may be available within the provisions of the Patent Act itself which provides the Controller with discretionary powers to be exercised in extraordinary circumstances such as in Chapter XV (Sections 77 to 81) and Section 10(3).

The section 3(d) is not a safety net for the India pharma companies enabling them to reverse engineer drugs. In fact, given the advancement of the Indian pharma R&D, it would indeed be a slur on their research capabilities. Neither is section 3(d) a speed breaker that seeks to curb R&D. Rather, section 3(d) is a provision that seeks to grant exclusive rights to the inventor of a genuine invention.

In the final countdown, when it comes to healthcare, it is not the businesses that matter, but the society that will benefit from the genuine inventions and the incremental innovations that provide relief to the ravages of a debilitating disease. This is very evident from the recent steps taken by the US and India among other countries to combat the H1N1 virus.

The author can be contacted at sunita@skslaw.org