Cancerous Battle: Novartis and NATCO clash over Eltrombopag

Through a landmark decision dated April 24th, 2024, the Division Bench of the Delhi High Court has overturned the decision of the Single Bench in Novartis AG & Ors. v. Natco Pharma Limited, which had granted Novartis an interlocutory injunction against Natco’s use of Eltrombopag Olamine (ELT-O). The decision of the Division Bench sheds light on several key dimensions of patent law and has many long-term implications for the pharmaceutical sector.

Background/Facts

Novartis initiated legal action against Natco, seeking a permanent injunction to halt Natco’s activities related to Eltrombopag bis (monoethanolamine), also referred to as Eltrombopag Olamine or ELT-O, marketed by Novartis under the brand names PROMACTA™ and REVOLADE™. Novartis alleged that Natco’s pharmaceutical product containing ELT-O, marketed under the trade name TROMBOPAG™, infringed their suit patent IN 233161 (IN’161). Alongside the injunction, Novartis also demanded an account of profits, damages, and surrender of infringing product stocks.

Natco challenged Novartis’s claims by asserting that their product, ELT-O, was covered under an earlier patent, IN 213176 (IN’176) and it had expired on May 24, 2021. They argued that ELT-O, being a salt of Eltrombopag free acid (ELT), constitutes a new form of a known substance. Natco contested the validity of Novartis’s suit patent on several grounds, including prior claiming, lack of novelty and inventive step, non-patentability under Section 3(d), lack of industrial applicability, and non-compliance with Section 8 of the Patents Act, 1970. It also accused Novartis of suppression and misrepresentation of information.

In its defence, Novartis argued that IN’176 only discloses Eltrombopag free acid (ELT) and not ELT-O, which is the subject matter of rights under IN’161. They further contended that ELT-O, despite being a salt of ELT, fell within the exception of Section 3(d) of the Patents Act due to its higher therapeutic efficacy on account of enhanced solubility and bioavailability.

The Single Judge dismissed Natco’s arguments, upholding the validity of the patent. Consequently, an interim relief was also granted, restraining Natco from various activities involving ELT-O, either independently or in combination with other compounds, covered by Novartis’s patent, regardless of the brand name used. The Court emphasized that the onus to establish the suit patent’s vulnerability on the ground of invalidity lay heavily on Natco and that Natco had failed to present a credible challenge to the validity of IN’161. Natco appealed against this decision before the Division Bench.

Court’s Observations

The Division Bench observed that the pivotal issue in this appeal revolves around the question of whether Natco has laid a credible challenge to the validity of the suit patent and whether Novartis was entitled to an interim injunction. According to the Court, the dispute concerns whether Novartis is entitled to patent rights in respect of ELT-O, despite the fact that ELT-O was also covered under IN’176, which expired before Natco launched its product.

(a) Standard of Challenge with regard to validity of patents

The Court emphasized that there is no presumption of a patent’s validity merely because it has been granted by the Patent Office. The Court also observed that the absence of pre-grant or post-grant opposition to a patent does not make it immune from challenge. The Court underscored that the Patents Act enables challenges to the validity of patents at different stages, including pre-grant and post-grant oppositions under Sections 25(1) and (2), petitions for revocation under Section 64(1), and suits for declaration of non-infringement under Section 105. The Court asserted that in patent infringement cases, defendants possess the right to contest a patent’s validity as per the legal framework outlined in the statute. Courts are obligated to approach such challenges with an open mind and not from the standpoint of an assumption that the patent is validly granted. During interim proceedings, defendants are not required to conclusively prove the patent’s invalidity but only exhibit its vulnerability. The threshold standard for resisting an interim injunction would be met if the challenge raised to the validity is substantial.

The Court also observed that if a defendant raises a substantial challenge, which merits a trial, the question of whether an injunction should be granted must be determined based on considerations such as the balance of convenience and irreparable harm.

(b) Section 3(d) of the Act

The Division Bench observed that the validity of IN’161 is required to be examined on the question of whether it qualifies the higher invention threshold as indicated in Section 3(d) of the Act. The Court deliberated extensively on whether enhanced bioavailability would establish higher therapeutic efficacy, particularly in the context of the landmark decision of the Supreme Court in Novartis v. Union of India.

The Division Bench pointed out that the Supreme Court had not accepted the argument that a demonstration of an increase in bioavailability was a demonstration of an increase in enhanced efficacy. The Supreme Court had categorically pointed out that “Whether or not an increase in bioavailability leads to an enhancement of therapeutic efficacy in any given case must be specifically claimed and established by research data”.

The Division Bench refused to concur with the observation of the Single Bench which had accepted the comparison between the bioavailability data of milled ELT-free acid and milled Ethanolamine Salt as enhanced therapeutic efficacy. It held that bioavailability is one of the pharmacokinetic parameters and not a direct measure of therapeutic efficacy. The Division Bench affirmed that enhanced bioavailability is not synonymous with higher therapeutic efficacy.

The Court contested Novartis’s assertion that ELT-O should be deemed to enhance therapeutic efficacy solely because ELT, without the pharmaceutical salt, would not be bioavailable for therapeutic effect. Citing the Division Bench judgment in Merck v. Glenmark, the Court concluded that the efficiency of administering an Active Pharmaceutical Ingredient (API) through an appropriate carrier does not alter the API’s therapeutic value.

(c) Coverage vs Disclosure

The Division Bench also discussed the concept of “coverage” versus “disclosure” in patents and expressed disagreement with the Single Bench’s opinion that a patent may cover a substance and yet not disclose the same. The Division Bench held that there cannot be a gap between the coverage of a patent and its disclosure. Citing the Supreme Court’s decision in Novartis v. Union of India, the Division Bench emphasized that such a dichotomy would contradict the fundamental principle of patent law, which grants monopolies in exchange for making inventions public.

Further referring to previous judgements, such as Merck v. Glenmark and Astrazeneca AB & Anr. v. Intas Pharmaceuticals Ltd., the Division Bench illustrated the importance of disclosure in patents. It clarified that while broad claims like Markush claims are permissible, they must not be overbroad or vague. The disclosure must enable a person skilled in the art to work the invention as claimed. The Division Bench noted that in both cases, interim orders were issued based on the understanding that the genus patent covered the product in question, and the same principles should be applied in the present case regarding the validity of patent claims concerning the compound ELT-O covered by both IN’176 and IN’161.

The judgment also delved into Section 10 of the Patents Act, emphasizing the requirements for complete specifications and the importance of fully and particularly describing the invention. It noted that if the specifications were compliant and the claim was valid, a compound covered within the claim would also be included in the complete specifications. Thus, a second patent for such a compound would be vulnerable to challenge on grounds like prior claiming, lack of novelty, and lack of inventive step.

Conclusion

In light of the aforementioned observations, the Court reached the conclusion that Natco had raised a credible challenge to the validity of IN’161, and thereby set aside the judgment of the Single Bench. The Court also added that the observations made were prima facie views and that the parties were not precluded from raising further contentions.

Relevant Paragraphs

“39. At the outset, it is relevant to note that there is no presumption of validity of a patent by virtue of the same being granted by the Patent Office. Thus, the fact that the examiners have conducted necessary investigations prior to the grant of patent does not render a patent immune from challenge to its validity. The contention that there was no pre-grant or post-grant opposition to IN’161 and therefore, Natco has to cross a very high threshold to assail the validity of the patent, is unmerited. The Act expressly enables a challenge to the validity of a patent at various stages.”

“41. Absent any statutory presumption and given the scheme of the Act, which enables challenge to the validity of a patent at several stages, there is neither any presumption as to the validity of a patent nor renders the patent immune for challenge to its validity.
42. Thus, in an action for infringement of a patent, defence as to the invalidity of the patent on the grounds as provided in Section 64(1) of the Act, is available to the defendant. The court is required to examine the challenge with an open mindset and not from the standpoint of an assumption that the patent is validly granted.
43. …. The defendant is not required to establish that the patent is invalid, it has to merely show that the patent is vulnerable. If the challenge raised to the validity is substantial, the threshold standard for resisting an interim injunction in this regard – subject to other relevant considerations
–would be met.”

“46. ….The fact that the patent authority may have the discretion not to revoke the patent despite a ground for the same being established, is not a relevant consideration for granting an interim injunction restraining the infringement of a patent on the ground that the defendant has not met the threshold standard of a credible challenge to the validity of the patent, if a prima facie ground for revoking the patent is made out.
47. If the defendant raises a substantial challenge, which merits a trial, the question whether an injunction ought to be granted would necessarily have to be determined on other considerations for grant of such injunctions including balance of convenience and irreparable harm.”

“50. In cases where a genus patent and species patent are asserted by the patentee, the issue that arises is whether monopoly granted in respect of the substance can be extended on account of it being covered under a patent that expires later.”

“73. The learned Single Judge has construed the above observations to hold that enhanced bioavailability is relevant while assessing enhanced therapeutic efficacy. We find ourselves unable to concur with the said view. The Court did not conclude that the property of enhanced bioavailability was a relevant factor in determining whether the invention had a higher therapeutic efficacy. On the contrary, the Court had emphasized the quote from a text – “However a determination that a drug product is bio-available is not in itself a determination of effectiveness”.
74. …. It is also apparent that the Supreme Court did not accept that a demonstration of increase in bioavailability was a relevant factor in determining whether the invention had a higher therapeutic efficacy. On the contrary, the Court had emphasized the quote from a text – “However a determination that a drug product is bio-available is not in itself a determination of effectiveness”.”

“84…. Bioavailability is one of the pharmacokinetic parameters and not a direct measure of therapeutic efficacy.”

“87. The assumption that enhanced bioavailability necessarily leads to higher therapeutic efficacy is too broad an assumption. It is desirable to have optimal pharmacokinetic parameters. In cases where a formulation has side effects, a lower bioavailability may be more beneficial.”

“102. …it is also necessary to clarify that a broad claim, which covers a large number of compounds with a common inventive concept at its core, also referred to as a Markush claim, is permissible, provided that the same is not overbroad or vague. The disclosure made would require to be seen in the light of the invention sought to be patented and disclosed. Thus, in cases where an active therapeutic ingredient, having therapeutic value is claimed and disclosed, the same may be patentable. The protection in respect of the said claim would extend to substances disclosed as well as to those that are not specifically disclosed but are obvious to a person skilled in art and/or can be anticipated. The gap between coverage and disclosure would thus, necessarily have to be confined to only those substances which are otherwise anticipated or obvious to a person skilled in the art. It cannot extend to other substances or products that are neither disclosed nor are obvious to or anticipated by a person skilled in the art.”

“118. If the complete specifications furnished are compliant with Section 10 of the Act and the claim is valid, then it would follow that a compound, which is covered within the said claim is also included in the complete specifications. Thus, the second patent for such a compound that was fully covered would be vulnerable to challenge on the ground of prior claiming [under Section 64(1)(a) of the Act] and lack of novelty [Section 64(1)(e) of the Act] and lack of inventive steps [Section 64(1)(f) of the Act].”

Citation: Natco Pharma Limited vs Novartis Ag and Anr, Delhi High Court, 24th April, 2024, FAO(OS) (COMM) 178/2021

Authored by Ms. Neetha Mohan, Patent Team, BananaIP Counsels.

Disclaimer

The case note/s in this blog post have been written by IP Attorneys at BananaIP Counsels based on their review and understanding of the Judgments. It may be noted that other IP attorneys and experts in the field may have different opinions about the cases or arrive at different conclusions therefrom. It is advisable to read the Judgments before making any decisions based on the case notes.

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