IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 06.08.2007 CORAM THE HON'BLE MR.JUSTICE R.BALASUBRAMANIAN & THE HON'BLE MRS.JUSTICE PRABHA SRIDEVAN W.P.NOS.24759 OF 2006 & 24760 OF 2006 Novartis AG Schwarzwaldalle 215 4058 Basel and Lichstrasse 35 4002 Basel, Switzerland represented by it's Power of Attorney Ranjna Mehta Dutt ..Petitioner in W.P.24759/06 Novartis India Ltd. Sandoz House Dr.Annie Besant Road Worli, Mumbai – 400 018 represented by it's Power of Attorney Saibal Mukherjee ..Petitioner in W.P.24760/06 Vs. 1.Union of India through the Secretary Department of Industry Ministry of Industry and Commerce Udyog Bhavan, New Delhi 2.The Controller General of Patents & Designs through the Patent Office Intellectual Property Rights Building G.S.T.Road, Guindy, Chennai – 600 032 3.Natco Pharma Ltd. "Natco House" Road No.2, Banjara Hills Hyderabad – 500 033 4.M/s.Cipla Ltd., India 289, Bellasis Road Opp.Hotel Sahil, Mumbai Central (E) Mumbai – 400 008 5.M/s.Hetro Drugs Ltd., India H No.8-3-168/7/1, Erragada Hyderabad – 500 018 6.M/s.Cancer Patient Aid Association, India No.5, Malhotra House, Opp.G.P.O. Mumbai – 400 001 https://hcservices.ecourts.gov.in/hcservices/ 7.M/s.Ranbaxy Laboratories Ltd., India 12th Floor, Deviks Tower No.6, Nehru Place, New Delhi – 110 019 8.Indian Pharmaceutical Alliance represented by it's Secretary General C/o.Vision Consulting Group No.201, Darvesh Chambers Khar, Mumbai – 400 052 9.M/s.Sun Pharmaceutical Industries Limited Acme Plaza, Opp.Sangam Cinema Andheri – Kurla Road Andheri (E), Mumbai – 400 059 (R8 and R9 impleaded as per order dated 29.01.2007 passed in M.P.Nos.3 & 5/06 in W.P.No.24759/2006) ..Respondents in W.P.24759/06 1.Union of India through the Secretary Department of Industry Ministry of Industry and Commerce Udyog Bhavan, New Delhi 2.The Controller General of Patents & Designs through the Patent Office Intellectual Property Rights Building G.S.T.Road, Guindy, Chennai – 600 032 3.Natco Pharma Ltd. "Natco House" Road No.2, Banjara Hills Hyderabad – 500 033 4.M/s.Cipla Ltd., India 289, Bellasis Road Opp.Hotel Sahil, Mumbai Central (E) Mumbai – 400 008 5.M/s.Hetro Drugs Ltd., India H No.8-3-168/7/1, Erragada Hyderabad – 500 018 6.M/s.Cancer Patient Aid Association, India No.5, Malhotra House, Opp.G.P.O. Mumbai – 400 001 7.M/s.Ranbaxy Laboratories Ltd., India 12th Floor, Deviks Tower No.6, Nehru Place, New Delhi – 110 019 ..Respondents in W.P.24760/06 Prayer in W.P.No.24759/2006: Writ petition under Article 226 of the Constitution of India praying to issue a writ of declaration declaring that section 3(d) of the Patents Act, 1970 as substituted by the Patents (Amendment) Act, 2005 (Act 15/2005) is non-complaint with the TRIPS Agreement and / or is unconstitutional being vague, arbitrary and violative of Article 14 of the Constitution of India and consequentially https://hcservices.ecourts.gov.in/hcservices/ to direct the second respondent to allow the Patent Application bearing No.1602/MAS/98 filed by the petitioner. Prayer in W.P.No.24760/2006: Writ petition under Article 226 of the Constitution of India praying to issue a writ of declaration declaring that section 3(d) of the Patents Act, 1970 as substituted by the Patents (Amendment) Act, 2005 (Act 15/2005) is non-complaint with the TRIPS Agreement and / or is unconstitutional being vague, arbitrary and violative of Article 14 of the Constitution of India. For Petitioner in both W.Ps: Mr.Habuibulla Badsha, SC, : Mr.Soli Sorabjee, SC and : Mr.Shanthi Bhushan, SC for : Mr.C.Daniel For R1 and R2 : Mr.V.T.Gopalan, SC for : Mr.P.Wilson, Asst.Sol.General For Respondent No.3 : Mr.P.S.Raman, AAG for : Mr.A.A.Mohan For R4, R8 and R9 : Mr.P.Aravind Datar, SC : Mr.R.Thiagarajan, SC & :Mr.K.M.Vijayan, SC for : Mr.A.Ramesh Kumar For Respondent No.5 & 7 : Mr.Lakshmi Kumaran For Respondent No.6 : Mr.Anand Grover for : Ms.R.Vaigai COMMON ORDER (Order of the court was delivered by Justice R.Balasubramanian) The writ petitioner in both the writ petitions is one and the same. In the first writ petition, Novartis – a foreign company represented by it's Indian Power of Attorney holder, is the writ petitioner. In the second writ petition, Novartis India represented by it's power agent is the writ petitioner. The respondents in both the writ petitions are one and the same. The prayer in both the writ petitions is one and the same namely, for a declaration that section 3(d) of the Patents Act, 1970, amended by Patents (Amendment) Act 15/2005, is unconstitutional. However, in the first writ petition there was an additional prayer in addition to the relief asked for. The additional prayer was to direct the second respondent in that writ petition namely, the Controller General of Patents and Designs, to allow the patent application bearing No.1602/NAS/98 filed by the petitioner seeking patent. However at a later stage, during the pendency of the writ petitions, M.P.No.1/2007 came to be filed in that writ petition seeking to delete the prayer for a direction to the Patent Controller to allow the application and it was accordingly ordered. Therefore as on date in the two writ petitions, the Constitutional validity of section 3(d) alone is in challenge, both on the ground that it violates not only Article 14 of the Constitution of India but also on the ground that it is not in compliance to "TRIPS". Both the writ petitions along with the connected miscellaneous petitions were https://hcservices.ecourts.gov.in/hcservices/ admitted by a learned Judge of this court and before the very same learned Judge, at a later stage, all the miscellaneous petitions came up for disposal. We are informed that elaborate arguments were advanced by the learned senior counsels on either side at that stage and on 26.09.2006 learned Judge, who heard these writ petitions with the connected miscellaneous petitions, came to the conclusion that the writ petitions require the attention of a Division Bench of this court, as according to the learned single Judge, the writ petitions involve substantial questions of law. Therefore learned single Judge passed an order directing the Registry to place the entire material papers before the Hon'ble Chief Justice for disposal by a Division Bench. Subsequently, by orders of the Hon'ble Chief Justice, these writ petitions are listed before us. Heard Mr.Soli Sorabji, Mr.Shanthi Bhushan and Mr.Habibulla Badsha, learned senior counsels appearing for the petitioners; Mr.V.T.Gopalan, learned Additional Solicitor General for the Government of India and the Controller of Patents and Designs; Mr.Anand Grover, learned counsel; Mr.P.S.Raman learned senior counsel; Mr.Aravind P Datar learned senior counsel; Mr.K.M.Vijayan learned senior counsel and Mr.Lakshmi Kumaran, learned counsel appearing for the various respondents. 2. In this judgment, for convenience sake, we will hereinafter refer the Patents Act as the "Principal Act"; Ordinance 7/2004 introducing an amendment to section 3(d) of the Act as the "Ordinance"; Amending Act of 2005 amending section 3(d) of the Act as the "Amending Act"; section 3(d) as the amended section and the Act after the amendment as the "Amended Act". The challenge to the amended section is mainly on two grounds namely, (a) it is not compatible to the agreement on Trade Related aspects of Intellectual Property Rights, hereinafter referred to as "TRIPS" for convenience sake; and (b) it is arbitrary, illogical, vague and offends Article 14 of the Constitution of India. For a better understanding of the attack to the amended section, we feel that it is desirable to extract hereunder section 3(d) of the Principal Act; the nature of amendment to that section sought to be brought in by the Ordinance and the amended section itself: "Unamended section 3(d): The mere discovery of any new property or new use of 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 atleast one new reactant. Amendment to section 3(d) under Ordinance 7/2004: The mere discovery of any new property or mere new use of a known substance or of the mere use of a known process; machine or aparatus unless such known process results in a new product or employs atleast one new reactant. Section 3(d) as amended by the Patents (Amendment) Act, 2005 with effect from 01.01.2005: The mere discovery of a new https://hcservices.ecourts.gov.in/hcservices/ 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 atleast one new reactant. Explanation: For the purposes of this clause, salts, esters, ethers, polymorphs, metabolites, pureform, 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." 3. Learned senior counsels appearing for the petitioners took us through the various covenants/clauses in "TRIPS" to argue that the amended section, as it stands today, runs contra to the various articles found incorporated in "TRIPS". The main thrust is with reference to article 27 of "TRIPS". It is contended that article 1(1) of the "TRIPS" mandates every member country to give effect to the provisions of the "TRIPS" and India being a member country, in implementing the various provisions of "TRIPS" brought in the amended section violating their obligations under "TRIPS". It is argued by learned senior counsels that the proposed amendment brought in under the Ordinance is compatible to "TRIPS". However, without any rhyme or reason, the proposed amendment sought to be introduced by the Ordinance had been completely given up and instead, the offending amended section was brought. The sum and substance of the argument advanced by learned senior counsels for the petitioner company is, by bringing in the amended section and the Explanation attached to it, the Union of India had infact not carried out it's obligations arising out of "TRIPS" and instead, by the amended section making that the discovery of a new form of a known substance, which does not result in the enhancement of the known efficacy of that substance as not patentable, the right to have an invention patented guaranteed under section 27 of the "TRIPS" is taken away. As far as the attack to the section on the ground of arbitrariness and vagueness thereby offending Article 14 of the Constitution of India, it is argued by Mr.Soli Sorabji, learned senior counsel, that the amended section as it stands today is unworkable. Section 3 of the Act enumerates what are not inventions. Under Article 27 of "TRIPS", all inventions, subject to paragraphs 2 and 3 of that Article, are patentable. Reading Article 27 as a whole, it is argued that the drug invented in the case on hand is patentable. Under the amended section, the patent applicant is required to show that the invention has enhanced efficacy of the known substance. Though the efficacy of a known substance may be well known, yet, unless there are some guidelines in the amended section itself to understand the expression "enhancement of the known efficacy" namely, what would be treated as "enhanced efficacy", an uncontrolled discretion is given to the Patent Controller to apply his own standards, which may not be uniform, in deciding whether there is enhancement of the known efficacy of that substance. Such wide discretion vested with a Statutory Authority without any guidelines to follow, would result in arbitrary exercise of power. In other words, the Patent Controller may be in a position to decide any case, based on his whims and https://hcservices.ecourts.gov.in/hcservices/ fancies namely, whether there is enhancement in the known efficacy or not. On this short ground, the section must be held to be violative of Article 14 of the Constitution of India. Likewise, in the Explanation attached to the amended section also, there is vagueness. The Explanation declares that all derivatives of a known substance shall be considered to be the same substance unless they "differ significantly in properties with regard to efficacy". Derivatives need not be the same substance in all cases. Unless the Explanation contains guidelines as to when a derivative can be held to differ significantly in properties with regard to efficacy, the Patent Controller will have an unguided power to decide the issue, which once again would result in arbitrariness. It is argued by learned senior counsels that though efficacy of a known substance could be clinically found, any discovery of a new form of the said substance or it's derivatives, though by themselves are inventions as defined in the Act, are denied patent based on the amended section containing specified offending clauses namely, it should show enhancement of the known efficacy and that the derivatives should differ significantly in properties with regard to efficacy. 4. Learned senior counsels on the opposite side would vehemently contend that the amended section is definitely compatible to "TRIPS". Even assuming that it is not so, the remedy to have the "TRIPS" agreement complied with in letter and spirit available to the member countries does not lie before the Indian courts but only before the Dispute Settlement Board, hereinafter referred to as "DSB" created under "TRIPS" itself. According to them, even assuming if "TRIPS" confers rights on any citizen/legal entity of a member country, then such person should also approach "DSB" only. "DSB" had been constituted to address all disputes that may arise between member countries and their citizens/legal entity in implementing or not implementing "TRIPS" and that is the exclusive authority to go into those controversies. Therefore the challenge to the validity of the amended section on the ground that it is not compatible to "TRIPS", cannot be legally sustained before Indian courts. It is contended by learned senior counsels and the other counsels on the opposite side that in discharging their obligations under "TRIPS", Government of India had brought in several amendments to the Parent Act and the amended section is one such provision. Every member country is given enough elbow room to bring in a local law in discharging their obligation under "TRIPS" having regard to the various needs of their citizens. India is a welfare country and it's first obligation under the Constitution is to provide good health care to it's citizens. When that is it's priority commitment under the Constitution of India, the Union of India has every right to bring in any local law in discharging their obligations under "TRIPS" to suit to the needs and welfare of it's citizens. On the attack to the amended section that it is vague, arbitrary and therefore unconstitutional, it is argued by learned senior counsels and the other counsels in the opposite camp that the amended section as it stands is workable. The Patent Controllers are all experts having undergone considerable training abroad in this field. The petitioner is not a novice to the field but on the other hand it is one of the pharmaceutical giants in the world. The efficacy of a known substance is well-known and it is definitely known to everyone in the pharmaceutical field. When the efficacy of that substance would stand https://hcservices.ecourts.gov.in/hcservices/ enhanced could also be clinically found by those in the field. The petitioner is not a common man but it is having the expertise behind it. When does the properties in a derivative differ significantly with regard to efficacy could also be scientifically established by the people in the field. Therefore when everyone in the pharmaceutical field understands what is meant by enhancement in the known efficacy of a substance or when it can be said that the derivatives differ significantly in properties with regard to efficacy and the Patent Controller also understands it, the amended section cannot be struck down on the ground of arbitrariness and vagueness. If the Patent Controller, exercising his Statutory power, wrongly rejects the patent application on the ground that the drug is excluded under the amended section, then such a decision could always be corrected by the Appellate Authority and then by the higher forums. In other words, a wrong decision arrived at by the Patent Controller based on wrong application of the amended section cannot be a ground to strike down the said amended section which is otherwise in order. Case law was cited at the Bar by learned counsel Mr.Lakshmikumaran appearing for the opposite party that Indian courts have no jurisdiction to test the validity of a municipal law on the ground that it is in violation of an International Treaty, assuming it is so. It is argued by Mr.Lakshmikumaran, learned counsel, by citing an English Court decision, that a member has a right to make a Law of it's own by breaking an International Treaty, if making such a Law is warranted, to meet the welfare of it's citizens. Responding to the arguments advanced by the learned senior counsels and the other counsels for the opposite party that Indian courts cannot test the validity of the amended section on the ground that it is in violation of an International Treaty, learned senior counsels appearing for the petitioner in each case contended, by showing a precedent, that Indian courts do have the power. It is also argued by them that even assuming for a moment without conceding that an Indian Law cannot be struck down on the ground that it is in violation of an International Treaty, yet, there is no bar, either express or implied, disabling Indian courts to give a declaration that the amended section is in violation of the International Treaty. After broadly stating their respective contentions, R3, R4, R5 & R7, R6, R8 and R9 filed their respective written submissions. 5. On the submissions made by the learned senior counsels on either side, we are of the considered opinion that the following issues arise for consideration in these two writ petitions: (a) Assuming that the amended section is in clear breach of Article 27 of "TRIPS" and thereby suffers the vice of irrationality and arbitrariness violating Article 14 of the Constitution of India, could the courts in India have jurisdiction to test the validity of the amended section in the back drop of such alleged violation of "TRIPS"? OR Even if the amended section cannot be struck down by this court for the reasons stated above, cannot this court grant a declaratory relief that the amended section is not in compliance of Article 27 of "TRIPS"?. https://hcservices.ecourts.gov.in/hcservices/ (b) If it is held that courts in India have jurisdiction to go into the above referred to issue, then, is the amended section compatible or non-compatible to Article 27 of "TRIPS"? (c ) Dehors issues (a) and (b) referred to above, could the amended section be held to be violative of Article 14 of the Constitution of India on the ground of vagueness, arbitrariness and conferring un-canalised powers on the Statutory Authority? 6. Let us take the first issue. (a) Assuming that the amended section is in clear breach of Article 27 of "TRIPS" and thereby suffers the vice of irrationality and arbitrariness violating Article 14 of the Constitution of India, could the courts in India have jurisdiction to test the validity of the amended section in the back drop of such alleged violation of "TRIPS" (OR) Even if the amended section cannot be struck down by this court for the reasons stated above, cannot this court grant a declaratory relief that the amended section is not in compliance of Article 27 of "TRIPS"?: In support of the arguments that Indian courts have jurisdiction to decide the issue under consideration, learned senior counsels appearing for the petitioners relied upon the decision of the House of Lords in the case reported in Equal Opportunities Commission & Another Vs. Secretary of State for Employment [ (1994) 1 AII ER Pg.910]. Employment Protection (Consolidation) Act, 1978 was under consideration in that judgment in the context of discrimination against women alleged. Under that Act, full- time workers, who worked for 16 or more hours a week had to be in continuous employment for two years to qualify for Statutory rights under the Act whereas, part-time workers, who worked between 8 and 16 hours in a week had to be in continuous employment for five years to qualify for the Statutory rights under that Act. That judgment noted that a great majority of full-time employers in the United Kingdom were men while the great majority of part-time workers were women. Equal Opportunities Commission took the view that such discrimination conflicted with the obligations of the United Kingdom under EEC Law namely, Article 119 of EEC Treaty and Council Directives 75/117 (the Equal Pay Directive) and 76/207 (the Equal Treatment Directive). The Secretary of the State declined to accept that the United Kingdom was in breach of it's obligations under Community Law while providing less favourable treatment in the conditions of employment of full-time workers and part-time workers. Therefore, the Equal Opportunities Commission applied for judicial review of the Secretary of State's decision and sought a declaration that the Secretary of State and United Kingdom were in breach of Community Law obligations and an order of mandamus requiring the Secretary of State to introduce Legislation to provide the right for men and women to receive equal pay for equal work. Further reliefs were also asked for. The Secretary of State raised two objections namely, the claim of an individual applicant is a private law claim, which ought not to have been brought against the Secretary of State by way of judicial review and that the Commission had no locus standi to bring the proceedings as it 's case did not involve any decision on justiciable issue susceptible of judicial review. It was further contended by the Secretary of State that the court had no jurisdiction to declare that United Kingdom or the Secretary of State was https://hcservices.ecourts.gov.in/hcservices/ in breach of any obligations under the Community Law and that the Divisional Court was not the appropriate forum to determine the substantive issue raised by the applicant. The Divisional Court, among other things, held that the court only had jurisdiction to declare rights and obligations enforceable under the existing state of the Law and had no jurisdiction to order mandamus requiring the Secretary of State to introduce Legislation to amend the 1978 Act or to declare that he was under a duty to do so. The Commission as well as the individual applicant appealed to the Court of Appeal, which dismissed the individual applicant's appeal on the ground that her application was essentially a private law claim, which should have been brought against her employer in an Industrial Tribunal and dismissed the Commission's appeal on the ground that the Secretary of State had not made any "decision". The Court of Appeal also held that there was no justiciable issue suitable for consideration by way of judicial review. The Commission and the individual appealed to the House of Lords. The House of Lords raised various questions to be addressed by it in that appeal and in our respectful opinion, the decision of the House of Lords on one of the questions raised by it to be addressed, would be relevant for the purpose of the case on hand. We extract that question hereunder: "The question is, whether judicial review is available for the purpose of securing a declaration that certain United Kingdom primary Legislation is incompatible with Community Law?" In deciding that issue, the House of Lords referred to Article 119 of the EEC Treaty, which provides for the following: "Equal pay for equal work to men and women; Council Directive (EEC) 75/117 (the equal pay directive); and Article 2 (1) of Council Directive (EEC) 76/207 (the equal treatment directive)". Section 2 of the European Communities Act, 1972 was also brought to the attention of the House of Lords. It being the telling provision in deciding the issue before us, we extract it hereunder: "(1) All such rights, powers, liabilities, obligations and restrictions from time to time created or arising by or under the Treaties and all such remedies and procedures from time to time provided for by or under the Treaties, as in accordance with the Treaties are without further enactment to be given legal effect or used in the United Kingdom shall be recognised and available in law, and be enforced, allowed and followed accordingly; and the