Section 3(d) of the Patents Act: interpretation continues to remain subjective

The government has recently taken several measures to strengthen the procedure of the IP offices and make them more transparent, including by amending the Patents Rules 2003 through the Patents (Amendment) Rules 2016, which set out the foundations for expediting, streamlining and strengthening patent protection in India to bring it into line with its global counterparts.   

According to the Annual Report 2014-15 of the Office of the Controller General of Patents, Designs and Trademarks (CGPDT), during that period that office was radically transformed through numerous initiatives that helped to:

  • make access to the IP system easier;
  • enhance efficiency in processing IP applications;
  • achieve uniformity and consistency in the examination of applications; and
  • strengthen transparency and the dissemination of IP-related information.

However, while the most recent trends in respect of the overall examination and disposal of patent applications indicate a significant improvement (according to a CGPDT presentation at a meeting of the secretary of the Department of Industrial Policy and Promotion with stakeholders on December 14 2016), one of the key issues that remains in regard to the prosecution of patent applications is the ambiguous and inconsistent standards regarding patentability under Section 3(d) of the Patents Act 1970 (as amended). Section 3(d) reads as follows:

"Section 3. What are not inventions. - The following are not inventions within the meaning of this Act...

(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."

In a landmark judgment in Novartis AG v Union of India (2013 (5) SCALE 12) the Supreme Court held that in the case of a medicine claiming to cure a disease:

  • the efficacy test can be only “therapeutic efficacy”; and
  • not all advantageous or beneficial properties are relevant, but only such properties that directly relate to efficacy (ie, therapeutic efficacy).

It was further held that in case of chemicals, particularly pharmaceuticals, if the product for which patent protection is claimed is a new form of a known substance with known efficacy, then in addition to Sections 2(1)(j) and (ja), the subject product must pass the test of enhanced efficacy as provided for in Section 3(d).

However, the Supreme Court made clear that its judgment did not hold that Section 3(d) bars patent protection for all incremental inventions of chemical and pharmaceutical substances. The court stated that it would be a grave mistake to interpret the judgment to mean that Section 3(d) was amended with the intention of undoing the fundamental change brought to the patent regime by deletion of Section 5 from the act.

Subjective interpretation of Section 3(d) and resultant ambiguities
During prosecution proceedings, Section 3(d) objections often raise concerns as the objection simply states, for example, that the subject matter of claims falls within the scope of Section 3(d) as they relate to derivatives of the compounds disclosed in the prior art documents. As such, Section 3(d) objections appear to fall short of the requirement to explain specifically the known substance and provide reasons as to why and how the subject matter of claims can be considered to relate to derivatives of the known substance. This practice continues in spite of the fact that in several decisions the Intellectual Property Appellate Board (IPAB) has held that the objections raised in examination reports should be definite and specific.

Further, a review of Indian Patent Office (IPO) decisions indicates that several terms and phrases in Section 3(d) can be interpreted in subjective, rather inconsistent ways. The Supreme Court ruling in Novartis that the test of efficacy can be only therapeutic efficacy appears to have resulted in an even stricter, narrower interpretation of Section 3(d) by the IPO in recent times. However, the Novartis decision was a fact-specific decision and the court did not pronounce on the issues surrounding the exact scope of therapeutic efficacy or provide guidance on which parameters amount to enhanced therapeutic efficacy, as the court observed that the case could be finally and effectively decided without examining these issues.

Even subsequent to the Novartis decision, the subjective interpretation of Section 3(d) by different IPO branches and the resultant ambiguities remain, as there have been examples of both narrow and liberal interpretations of Section 3(d). This has been the case notwithstanding significant IPAB decisions in Fresenius Kabi Oncology Limited v Glaxo Group Limited (ORA/17/2012/PT/KOL) and Ajanta Pharma Ltd v Allergan (ORA/21/2011/PT/KOL), which further clarified certain terms and phrases in the provision and the requirements for its application which are binding on the IPO, and the IPO guidelines on the examination of patent applications for inventions specifically relating to biotechnology and pharmaceuticals with a view to maintaining uniformity and consistency among offices and achieving transparency in the examination process.

In Fresenius Kabi Oncology Limited the IPAB held that the patentee must prove the enhanced therapeutic efficacy of the invention, but in revocation proceedings the party seeking revocation must prove that the claimed invention falls under Section 3(d) and has the same therapeutic efficacy as the known substance; the patentee will then counter by proving either that it is not a derivative of a known substance or that it is only a new form of a known substance which has been shown to have enhanced therapeutic efficacy. Further, in Ajanta Pharma Ltd the IPAB held that the term 'combination' in the explanation to Section 3(d) can mean only a combination of two or more of the derivatives mentioned in the explanation or a combination of one or more of the derivatives with the known substance which may result in a significant difference with regard to the efficacy.

In several IPO decisions where, even after acknowledging the novelty or inventive step of the claimed invention being directed to a new chemical entity (which, by definition was a new and technically unique compound) over the cited closest prior art, the subject patent applications were refused under Section 3(d) on the grounds that the claimed compounds were structurally or functionally similar to the compounds of the prior art. The basic error appears to lie in considering the novel chemical entities merely as “a new form or derivative of a known substance” in order to fall under Section 3(d) without appreciating the interpretative significance of the expression 'other derivatives' used in the explanation to Section 3(d). The mere assertion that the compounds in the prior art are similar to those claimed in the application does not appear to be a proper basis for rejection under Section 3(d).

Further, IPO decisions repeatedly focus on providing substantive comparative test research data at the time of filing the complete specification which seems unreasonable, as in many cases, experimental data relating to properties of the claimed invention demonstrating an improvement in efficacy may simply be unavailable at the time of filing and could be submitted only later in accordance with the requirement. In this regard, the Manual of Patent Office Practice and Procedure also provides that the description within the complete specification may clearly and categorically state how the efficacy of the subject matter differs from that of the known substance at the time of filing or subsequently by way of a specification amendment under Section 59 of the act.

Some recent representative examples depicting this inconsistency and incoherency include Decisions 9668/DELNP/2007 (November 8 2016), 6087/DELNP/2005 (January 13 2015), 219/KOLNP/2008 (March 8 2016), 991/MUMNP/2003 (September 3 2015), 630/DELNP/2008 (November 11 2014) and 3179/DELNP/2008 (February 6 2013), which appeared to raise concerns as to the stricter and narrower interpretation of Section 3(d) in regard to the determination of a known substance, a new form thereof, the standard of proof or experimental evidence. In contrast, Decisions 1119/DEL/2007 (January 24 2017), 3140/KOLNP/2007 (August 25 2015), 983/MUMNP/2012 (January 25 2017), 6476/DELNP/2007 (December 23 2015) and 495/MUMNP/2009 (September 18 2014) have indicated a liberal interpretation of Section 3(d) in regard to these aspects.

Need for greater clarity
Due to the continuing subjective interpretation of Section 3(d) by different IPO branches and the resultant ambiguities, more clarity is needed on the scope and purpose of Section 3(d), particularly with respect to the application of the Supreme Court's Novartis decision from an evidentiary standpoint.

However, this becomes even more important in view of the Division Bench of the Delhi High Court 2015 ruling in F Hoffmann-La Roche Ltd v Cipla Ltd (RFA(OS) 92/2012 & RFA (OS) 103/2012), in which the court, after analysing provisions including Sections 2(1)(j) and 3 of the act, held that Section 3 lays down a threshold for patent eligibility and is not an exception to Section 2(1)(j). It held that Section 2(1)(j) provides a theoretical definition of an 'invention', while Section 3 illustratively outlines what do not constitute inventions. In other words, for subject matter that falls outside the scope of Section 3, a qualitative analysis must be employed to ascertain whether it satisfies the conditions of Section 2(1)(j), while for subject matter that falls within the scope of Section 3, an analysis under Section 2(1)(j) need not be employed as it will be rejected at the threshold. At the same time, the court observed that Section 3(d) is a positive provision that recognises incremental innovation.

In Novartis AG the Supreme Court did not rule on whether Section 3(d) sets out a patent eligibility or patentability standard, but rather held that however Section 3(d) was viewed – whether as setting up the standards of patentability or as an extension of the definition of 'invention' – the subject product (ie, the beta crystalline form of imatinib mesylate) failed the Section 3(d) test. It will be interesting to see how the IPO will apply this aspect.

Next steps
Based on IPO jurisprudence on Section 3(d), existing interpretations do not appear to do justice to the statutory provisions. The Supreme Court is now finally considering the various questions of law and issues such as the true import of Section 3(d) and the interplay of Section 3(d) regarding Sections 2(1)(j) and 2(1)(ja) in the pending civil appeal arising out of Delhi High Court's decision in F Hoffmann-La Roche Ltd. It is hoped that the jurisprudence on the subject will be revisited and statutory provisions will be interpreted in a manner suited to the true intent behind their promulgation, thereby providing much-needed clarity on the issues involved and legal certainty to the granting process, benefitting both patent applicants and third parties.

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