FAO (O.S.) No. 188/2008 Page 1 of 57 IN THE HIGH COURT OF DELHI AT NEW DELHI FAO (OS) 188/2008 Date of decision: April 24th 2009 F.HOFFMANN-LA ROCHE LTD. & ANR ..... Appellants Through Dr. A.M. Singhvi, Senior Advocate, Mr. Parag. P. Tripathi, Senior Advocate with Mr. Raman Kapur, Mr. Manish Kumar, Mr. Jayant Mehta, Mr. Aditya Kant, Mr. Amit Kumar, Mr. Amey Nargolkar, & Ms. Arti Gupta, Advocates for appellant No. 1. Mr. A.S. Chandhiok, Senior Advocate, Mr. Jayant Nath, Senior Advocate with Mr. Raman Kapur, Mr. Manish Kumar, Mr. Jayant Mehta, Mr. Aditya Kant & Mr. Amit Kumar, Advocates for appellant No. 2. versus CIPLA LTD. ..... Respondent Through Mr. Arun Jaitley, Senior Advocate with Mr. S. Majumdar, Ms. Prathiba M. Singh, Ms. Bitika Sharma, Mr. Saurabh Mishra & Ms. Saya Chowdhary, Advocates. CORAM: HON'BLE THE CHIEF JUSTICE HON'BLE DR. JUSTICE S.MURALIDHAR 1. Whether Reporters of local papers may be allowed to see the judgment? Yes 2. To be referred to the Reporter or not? Yes 3. Whether the judgment should be reported Yes in Digest? JUDGMENT 24.04.2009 Dr. S. Muralidhar, J. 1. This appeal by the Plaintiffs F. Hoffmann-La Roche Ltd. (`Roche‟) and OSI Pharmaceuticals Inc. (`OSI‟) is directed against the judgment dated 19th March, 2008 passed by the learned Single Judge of this Court dismissing I.A. No. 642/2008 filed by them in their suit CS (OS) No.89/2008, thereby FAO (O.S.) No. 188/2008 Page 2 of 57 declining their prayer for grant of an interim injunction to restrain the Defendant/Respondent Cipla Limited from manufacturing, offering for sale, selling and exporting the drug Erlotinib, for which the plaintiff No. 2 claimed to hold a patent jointly with Pfizer Products Inc. The impugned judgment nevertheless put the defendant to terms including furnishing an undertaking to pay damages to the plaintiffs in the event of the suit being decreed, to maintain accounts of the sale of its product Erlocip, file in the court quarterly accounts along with the affidavit of one of its directors, and to file in the court annual statement of the sales of Erlocip duly authenticated by its chartered accountants on the basis of its records, including the sales tax and excise returns. 2. For convenience, the appellants are referred to as the plaintiffs and the respondent as the defendant. Case of the Plaintiffs 3. In the plaint in the suit CS (OS) No.89 of 2008 it is stated that plaintiff No.2 OSI jointly owns a patent with Pfizer Products Inc. in respect of a small drug molecule medically termed as a “Human Epidermal Growth Factor Type- 1/Epidermal Growth Factor Receptor” (HER/EGFR) inhibitor, popularly known as Erlotinib. It is claimed that the said drug marked a major breakthrough and innovation in the treatment of cancer. According to the plaintiffs the various tests conducted on Erlotinib have shown a marked increase in the survival benefit in the patients suffering from advanced or metastatic non small cell lung cancer (NSCLC). The metastatic NSCLC is FAO (O.S.) No. 188/2008 Page 3 of 57 most prevalent form of this cancer. 4. The plaintiffs state that Erlotinib is administered in the form of a Tablet and sold under the trademark and name of „Tarceva‟, which is registered in the name of plaintiff No.1 Roche. It is claimed that Erlotinib and its formulation „Tarceva‟ have been approved by the United States (U.S.) Food & Drug Administration (FDA) in the year 2004 and thereafter by the European Union (EU) in the year 2005. On 13th March, 1996 OSI along with Pfizer Products Inc. made an application to the Controller General of Patents, Trademarks and Designs, New Delhi for grant of a patent in respect of Erlotinib. The Controller General of Patents, New Delhi granted the said applicants a certificate bearing Patent No.196774 dated 23rd February, 2007 which was subsequently recorded in the Register of Patents on 6th July, 2007. It is submitted that in terms of the amendments to the Patents Act, 1970 („Act‟) in 2005, the product Erlotinib as well as the process of its manufacture stand patented and are entitled to protection as such. The plaintiffs‟ product Erlotinib Hydrochloride Tablets (Tarceva) was registered by the Central Drug Standard Control Organisation, Directorate General of Health Services, Government of India under Registration Certificate dated 23rd December 2005 in the name of plaintiff No.1 Roche. 5. On 8th January, 2001, plaintiff No.2 OSI and plaintiff No.1 Roche entered into a development collaboration and licensing agreement whereby Roche was granted licence to use and sell and offer for sale the licenced products of the former including Erlotinib. Roche was further licenced and authorized to cause enforcement of any infringement of property rights of any of the products of FAO (O.S.) No. 188/2008 Page 4 of 57 plaintiff No.2 OSI. It is claimed that Roche introduced Tarceva in India some time in April 2006. The announcement regarding the launch of Tarceva by the subsidiary of the Roche Group in India was given wide publicity by the media inter alia in view of its importance in cancer treatment. 6. The defendant Cipla Limited (`Cipla‟), a company incorporated under the Companies Act 1956 and having its registered office at Mumbai, is alleged to have announced in the print and electronic media its plan to launch a generic version of Tarceva (Erlotinib) in India. One such news item appeared on 11th January, 2008 in an English daily „Mint‟ having wide circulation in New Delhi, Mumbai and Bangalore. The plaintiffs state that from such news report they learnt for the first time of Cipla‟s plans to infringe and violate the plaintiffs‟ rights. According to the plaintiffs the drug Tarceva (Erlotinib) has been developed after a long sustained research and after incurring enormous expenditure inter alia on the tests which are mandatorily conducted for its efficacy and safety. It was alleged that the said innovation was duly protected under law and that no person except those legally authorized to exercise legal rights associated with the aforementioned patented drug could be allowed or permitted to simulate, re-create it in any manner or in any other name. It was alleged that the defendant had no right to opt to manufacture, sell or offer to sell any version of the drug Tarceva (Erlotinib) and that such action of the defendant, as announced by it, would be in blatant violation of the legal rights of the plaintiffs. 7. In para 20 of the plaint it was asserted that the plaintiffs were under imminent threat of violation of their patent rights inter alia at New Delhi. It FAO (O.S.) No. 188/2008 Page 5 of 57 was further asserted that “the application for the patent of the drug and process of manufacture of Tarceva (Erlotinib) was made and the patent was granted at New Delhi”. It was argued that, therefore, this Court has territorial jurisdiction to adjudicate the suit. The suit was valued at Rs. 20 lakhs and for the relief of damages, it was tentatively valued at Rs.1 crore. 8. The suit was filed on 15th January, 2008. Along with the suit the plaintiffs filed an application under Order XXXIX Rule 1 Code of Civil Procedure 1908 (CPC), I.A. No. 642/2008, seeking ad-interim injunction restraining the defendant from infringing the plaintiffs patent in respect of Tarceva (Erlotinib).The two important points to be noted at this stage are that the plaintiffs asserted in the plaint that plaintiff No.2 was granted a patent for Tarceva (Erlotinib) jointly with Pfizer Products Inc. It was stated that the certificate bearing patent No. 196774 dated 23rd February, 2007 recorded in the Register of Patents on 6th July, 2007 pertained to Erlotinib Hydrochloride which was marketed as Tarceva. Secondly, in the plaint no details of the specification of the aforementioned patent or the x-ray diffraction of the product (tablet) Tarceva or the defendant‟s Erlocip was indicated. Plea of the defendant in its written statement to the injunction application 9. The suit was listed before the learned Single Judge on 15th January, 2008, on which date the defendant appeared. The case was thereafter listed on 18th January, 2008 for the hearing of the application I.A. No. 642/2008 filed by the plaintiffs seeking ad-interim injunction. The defendant filed an application on 18th January, 2008 for a direction to the plaintiffs to disclose the patent specification. At the hearing on 18th January, 2008, the counsel for the FAO (O.S.) No. 188/2008 Page 6 of 57 plaintiffs handed over to the counsel for the defendant the patent specification. 10. On 21st January, 2008, the defendant filed its written statement to the injunction application along with documents. It was stated that the complete specification which ought to have been disclosed in the plaint was supplied by the plaintiffs only at the hearing of the injunction application. The defendant claimed that it had applied for drug approval for the Erlotinib tablet in May 2007 and the approval was granted in October, 2007. As on December, 2007 it had received approval from the Government of Goa for manufacturing the said tablet in various pack sizes of 30,60,100,500 and 1000 tablets. The defendant had launched the product under the mark Erlocip and the said tablet was used for treatment of lung cancer. 11. It was pointed in the written statement that in terms of the second proviso to Section 11-A(7) of the Patents Act 1970, introduced by the Patents (Amendment) Act, 2005 (effective from 1st January, 2005), in case of patent applications filed under Section 5 (2) [which concerns a claim for patent of an invention for a substance itself intended for use, or capable of being used, as medicine or drug] the rights of a patentee accrue only from the date of the grant of the patent. It was also pointed out that although a certificate was issued to the plaintiffs by the Controller General of Patents bearing Patent No.196774 dated 23rd February 2007, the pre-grant opposition was disposed of only on 4th July 2007. Therefore the patent could not have been granted with effect from 23rd February 2007. It was submitted that the patent certificate was accordingly incorrect and the proceedings in the suit ought to be stayed till the correct authenticated certificate was produced. It was claimed that the patent FAO (O.S.) No. 188/2008 Page 7 of 57 could not be presumed to be valid unless it was more than six years old and since the patent was a new one patent and “granted under peculiar and suspicious circumstances” no injunction ought to be granted. 12. It was mentioned in para 15 that the defendant had also filed a counter claim along with written statement praying for the revocation of the patent granted to the plaintiff. The grounds for revocation raised in the counter-claim were asked to be treated as part of the written statement. 13. In para 16 of the written statement it was specifically averred that the plaintiffs‟ patent “for which the complete specification is yet to be disclosed for the drug Erlotinib” was “completely invalid”. A reference was made to Section 3(d) of the Act and it was submitted that Erlotinib is a derivative of a known patent “Quinazoline”. It was stated that there were at least three EU patents dating back to 1993 which disclosed the Quinazoline derivative. One of the said patents disclosed the exact chemical structure as found in the plaintiff‟s patent except for one substitution which is “obvious to any person skilled in the art”. Further, the plaintiff had failed to prove that there was “any improved efficacy of the said drug”. No figures or data had been provided in support of such claim. It was claimed that there was no invention or inventive step in the patent. The patent compound would be obvious to a person skilled in the art to arrive at. It was specifically averred that “the alleged patented product is nothing but a derivative from Gefitinib of Astrazeneca for which a patent was refused in India”. FAO (O.S.) No. 188/2008 Page 8 of 57 14. It was averred in the written statement that one of the pre-conditions for recently granted patent claim to be protected was that it ought to be “worked fully and commercially”. It was pointed that the plaintiff got approval for importing and selling Erlotinib only in December 2005 and even as on date the product was neither easily available nor affordable due to its high pricing. No sales figures for the product for India had been given in the plaint in the attached documents and not even one invoice had been filed by the plaintiff. The plaintiff never chose to obtain exclusive marketing rights (EMRs) during the time that the law in India permitted it. 15. The written statement specifically pleaded public interest. It was pointed out that each tablet of the plaintiffs‟ drug Tarceva costs Rs.4,800/- whereas each tablet the defendant‟s Erlocip costs Rs.1,600/-. Thus, a one month dosage of Tarceva for a patient undergoing treatment for cancer would cost Rs.1.4 lakh whereas the equivalent dosage of Erlocip would cost Rs.46,000/-. It was pointed out that in the context of life saving drugs, it was in the public interest that the drug should be made available at cheap and affordable prices. 16. Along with the written statement, the defendant filed copies of the European Patent “Publication No.0566 226 A1” (hereinafter EP‟226) which was an application of Astrazeneca Limited in the EU for grant of patent in respect of „Gefitinib‟. Among the other documents filed by the defendant was the decision dated 30th August, 2007 of the Controller of Patents in India rejecting the application by Astrazeneca UK Limited for grant of patent in respect of Gefitinib. In the said application Astrazeneca UK Limited had cited EP‟226 as the prior art and claimed that Gefitinib involved an inventive step FAO (O.S.) No. 188/2008 Page 9 of 57 with respect to that prior art and with enhanced efficacy. The Patents Controller concluded that Gefitinib was “obvious and does not involve an inventive step over the prior art EP „226. It was therefore held to be not an invention within the meaning of section 2(1)(j) of the Patents Act, 1970 and no patentable invention within the meaning of section 3(d) of the Patents Act, 1970. In its written statement to the injunction application the defendant also placed on record the documents pertaining to US Patent No.6900221 (hereafter U.S.‟221) filed by OSI in the US for Polymorph-B. The said application was filed on 9th November, 2000 and was granted on 31st May, 2005. Defendant’s counter-claim 17. In the counter-claim filed by the defendant it was contended that under Section 2 (1) (ta) of the Patents Act 1970, inserted by the 2005 amendment, the expression „pharmaceutical substance‟ has been defined to mean “any new entity involving one or more inventive steps” and under Section 2 (1) (l) a “new invention” was defined as an invention “which has not been anticipated by publication in any document used in the country or elsewhere in the world before the date of filing a patent application with complete specification.” It was contended that the suit patent therefore needed a special scrutiny as to the question of validity in the light of the above provisions which were specific to inventions in the field of pharmaceuticals. 18. In para 3.6 of the counterclaim it was contended by the defendant that the plaintiff “had failed to provide any evidence that the compound of claim 1 of the impugned patent possesses significantly enhanced activity over the closest FAO (O.S.) No. 188/2008 Page 10 of 57 compound of the prior art.” In para 3.7 it was averred that the plaintiffs had not provided the relevant data that was required to demonstrate that the claimed compound had a higher therapeutic efficacy. In para 3.8 a reference was made to U.S.‟221 which clearly stated that the compound Erlotinib Hydrochoride was a mixture of two polymorphs A&B and that one needed to separate and purify the B polymorph so as to get to the claimed compound for acceptable efficacy. It was stated that subsequent patent clearly defeated the inventive step of the alleged invention. 19. In para 4 of the counter claim it was averred that the suit patent, i.e., Patent No.196774 [corresponding to US Patent No.5747498 – hereafter U.S.‟498] had been obtained by the plaintiffs by suppression of material information. It was stated in para 4.2 as under: “It is stated that the patentee knew very well that if it discloses the truth that the claimed product is in the form of a polymorph then the patent application would have been rejected at the outset because there is nothing to show that the product has enhanced therapeutic effect. Therefore by suppression of material facts the patentee has managed to obtain the impugned patent by by-passing the provisions of Section 3(d).” 20. In para 5.2 of the counter claim the defendant pointed out as under: “The present impugned patent fails to disclose that the compound of claim 1 of the impugned patent is actually a mixture of polymorphs, which is useless for pharmaceutical use. The patentee has intently and capriciously withheld material information that is important for practicing the alleged invention disclosed FAO (O.S.) No. 188/2008 Page 11 of 57 in the impugned patent. Therefore, the defendant states that the specification of the impugned patent does not sufficiently describe the invention, particularly with regard to compound of claim 1 of the impugned patent. The impugned patent is therefore liable to be rejected on this ground alone.” Defendant’s application under O VII R 11 CPC seeking dismissal of the Suit 21. On 30th January, 2008 the defendant filed an application I.A. No.1272/2008 before the learned Single Judge seeking dismissal of the suit. The thrust of this application was that the defendant had discovered that the plaintiffs had made two further applications for grant of patent in respect of the same chemical compound for a different crystal form which was termed by the plaintiffs as B- polymorph. The first application was filed on 14th May, 2002 and published first on May 20, 2005 and thereafter re-published on 23rd February, 2007. In the said application priority was claimed over three US applications one of which was U.S.‟221. The second application which was filed on May 13, 2002 and published on 20th May, 2005 claimed priority over three US applications one of which was U.S.‟221. It was pointed that the suit patent had claimed priority over U.S.‟498 published on 5th May, 1998. A reference was made to the statements made by the plaintiffs in U.S.‟221 which showed that the Indian patent No.196774 was in relation to the hydrochloride compound in the form of mixture of polymorphs A and B which was known to the plaintiffs way back in the year 2000 since this corresponded to U.S.‟498 which was granted in 1998 itself. However, this fact was never stated in the application made before the Patent Controller. Since the admitted position of the plaintiffs was that patent No.196774 was not a preferred form for manufacture of tablets, the FAO (O.S.) No. 188/2008 Page 12 of 57 defendant was curious to know how the plaintiffs were still importing and selling tablets of the said Hydrochloride compound under the brand “Tarceva”. It sought to determine the actual crystalline structure of the tablets and accordingly purchased some manufactured in August 2006 from the local market. The x-ray diffraction data of Tarceva sold in India showed that it was “B-Polymorph of the Hydrochloride”. This was confirmed by the defendant‟s expert Mr. Manish G. Gangrade who performed the technical evaluation. On an analysis of the X-ray diffraction pattern he came to the follwoing conclusion: “Tarceva tablets are wholly B polymorph of the hydrocholoride salt of N-(3-ethynylphenyl)-6, 7 bis(2-methoxyethoxy)-4-quinazolinamine. I further say that the X-ray powder diffraction of Tarceva clearly goes to show that it is not A polymorph or a mixture of A and B polymorph but is wholly B polymorph of the said compound.” 22. It was stated in paras 12, 14 and 15 of the application as under: “12. The plaintiff in its various pleadings has claimed that the patented drug has been sold by it in India since April, 2006, meaning thereby the drug which is sold in India is the drug for which the patent has already been granted, i.e., Patent No.196774. However, an analysis of the drug which is sold in India and the patent which is registered as also the patent which is pending in India reveals that the case of the plaintiff is completely false. The drug sold by the plaintiff in India appears to relate to the said pending patent applications and not the granted patent No.196774. …… 14. It is, thus, obvious that the plaintiff has come to this Hon‟ble Court with a completely false and FAO (O.S.) No. 188/2008 Page 13 of 57 incorrect case. The plaintiff has deliberately failed to file the patent specification in the first place by claiming confidentiality. When the defendant showed that as per the statute a patent specification is a public document the plaintiff was forced to reveal the same. Now it has come to light that the drug which is marketed by the plaintiff is not at all the product for which the alleged patent has been obtained. The patent application for the drug which is marketed by the plaintiff is still pending in the patent office. The plaintiff has also suppressed the fact that it has made two further Patent Applications for the same compound, i.e. hydrochloride salt of N(3 ethynylphenyl)-6, 7-bis (2-methoxyethoxy)-4 quinazolinamine in B-Polymorph form. The defendant has already filed pre-grant oppositions against the said patent applications. Copy of the said pre-grant oppositions for patent application No. IN/PCT/2002/00507 and Patent application No.IN/PCL2002/00497 are annexed as Annexure E-6 and Annexure E-7. For ready reference the defendant is annexing herewith copies of the US Patent Nos. 5747498 and 6900221 downloaded from the USPTO. The said patent no. 5747498 corresponds to Indian Patent No.196774 which is the alleged equivalent of the patent which is subject matter of the present suit, while US Patent No.6900221 corresponds to the two aforesaid applications against which the opposition is filed by the defendant. The patent specification of Patent application No.IN/PCT/2002/00507 is annexed as annexure E-8 and the patent specification of Patent application No. IN/PCT/2002/00497 is annexed as Annexure E-9. 15. It is, thus, submitted that the entire case of the plaintiff is based on a false premise. The plaintiff is FAO (O.S.) No. 188/2008 Page 14 of 57 obviously not marketing the drug which is allegedly covered by the patent which is already granted. The drug which is being marketed is a drug which is related to the subsequent patent applications in India which are pending. These facts ought to have been disclosed by the plaintiff before this Hon’ble Court. The plaintiff has deliberately claimed in its pleadings that the sales of the patented drug are approx Rs.13.91 crores when it was well aware that the drug which is being manufactured and marketed by it is still pending for patent protection. Therefore, there has been no sale of the product form patented under No.196774.” (emphasis supplied) 23. However, while notice was directed to issue in the application on 31st January 2008, on that very date the arguments in the injunction application I.A. No.642/2008 were concluded before the learned Single Judge and orders reserved. Thus in the impugned judgment the learned Single Judge did not advert to I.A. No.1272/2008 although a reference was made in the passing to the facts concerning polymorph-B. Summary of conclusions of the learned Single Judge 24. The summary of the conclusions arrived at by the learned Single Judge in the impugned judgment dated 19th March, 2008 are as under: (i) Section 3(d) of the Patents Act, 1970 was not merely clarificatory of the pre-existing law as contended by the plaintiffs. The Parliament consciously enacted a standard of known obviousness as a pre-condition of patentability; it also excluded the derivatives of known substances