Does Section 3(d) Make India Bad for Business?

Published on 12 May, 2016

India's Patent Research

Introduced as an amendment to the Indian Patents Act in 2005, paragraph 3d has been a hot topic of debate ever since the famous Novartis (Gleevec) case of 2005. This section has long been criticized by international pharmaceutical companies as a bane, viewing it as a hurdle for the industry’s growth as it made India's patent environment unsuitable for doing business.

Does it really though?

When India became a signatory to the TRIPS agreement in 1995, it became necessary to include process’ and product patents on medicines and food from January 1, 2005. By this time, India had established itself as a generics hub and had to ensure that Indian generics could enter the market and compete with their international counterparts, while keeping healthcare products affordable for its domestic consumers.

Section 3(d) states that 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 are not inventions.

The most controversial bit here is enhanced efficacy, which became a focal point for debate in the famous Novartis (Gleevec) case.

Novartis stated that the patent under opposition claimed a crystalline form of the imatinib, imatinib mesylate (Gleevec) salt had better flow properties and was thermodynamically more stable and less hygroscopic.
In addition, Novartis argued that Gleevec was 30% more bioavailable and, hence, had enhanced efficacy.

The Supreme Court interpreted the term efficacy in Section 3(d) as therapeutic efficacy, an interpretation that was discussed at length.

Those elements defined by Novartis weren’t elements measured for determining therapeutic efficacy.

The court held that increased bioavailability cannot imply higher therapeutic efficacy, which has to be shown by separate experiments. After several arguments, on April 1, 2013, the Supreme Court held that Novartis’ patent application failed Section 3 (d)’s standard and, hence, was rejected.

This led to strong opposition from large multinational companies such as Bayer, Novartis, and Merck, all of whom complained that India's patent environment was not suitable for doing business. Ranjit Shahani, the Chairman of Novartis (India) was quoted saying: "India is not ready to provide the ecosystem necessary for encouraging innovative products to be launched, even though it joined the WTO 18 years ago."

Nonetheless, Section 3(d) still stands strong.

While many believe the Indian Patents Act squelches incremental innovations based solely on their interpretation of section 3(d), they’ve probably not accounted for Section 54 (patents of addition) that grants patents for an improvement in or modification of an invention with regard to a main invention.

Section 3(d) isn’t a hurdle while applying for patents as it doesn’t really hamper the pharmaceutical industry’s growth.
Patents are continuously being filed and granted by both Indian and foreign innovators.

Since 2005, a substantial number of product patents have been granted in India. According to a newsfeed on Livemint , “from April 2005 to March 2010, the patent office granted 3,488 drug patents, of which more than 3,000 were granted to foreign pharma companies”.
The foreign companies include big names such as Pfizer, Novartis and F Hoffmann La Roche.

Considering its benefits, developing countries such as the Philippines, Argentina, and Brazil have also introduced their versions of Section 3(d).

India should certainly maintain its current position on Section 3(d) which not only keeps medicines affordable for people in India as well as abroad, but also prevents patent evergreening by protecting only those applications that are truly innovative.