Novartis AG v. Union of India & Others

Case Name: Novartis AG v. Union of India & Others

Citation: (2013) 6 S.C.C. 1 (India).

Court: Supreme Court of India

Bench: Justice Aftab Alam and Justice Ranjana Prakash Desai

Date of Judgment: April 1, 2013

Relevant Statutes and Key Provisions

The Patents Act, 1970 – particularly Section 3(d).

Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), 1995.

Constitution of India – Articles 14, 19, 21 (raised indirectly).

Facts

Novartis AG, a Swiss pharmaceutical giant, developed Imatinib Mesylate, marketed as Glivec, for treating chronic myeloid leukemia (CML) and other cancers. In 1998, Novartis applied to patent the beta crystalline form of Imatinib Mesylate through India’s “mailbox” system, which held pharmaceutical patent applications until product patents became legal in 2005.

The Madras Patent Office rejected Novartis’s patent application in 2006, citing a lack of novelty and inventive step. On appeal, the IPAB (Intellectual Property Appellate Board) agreed on novelty but ruled the application failed under Section 3(d) of the Patents Act, as Novartis did not prove “enhanced efficacy”. Novartis challenged this before the Supreme Court of India, arguing the improvements in stability and bioavailability met Section 3(d) and that the provision was unconstitutional and non-compliant with TRIPS.

The case became a test for India’s approach to incremental pharmaceutical innovation, patent protection, and access to affordable medicines.

Issues Involved

• Does the beta crystalline form of Imatinib Mesylate qualify as a patentable ‘invention’ under Section 3(d) of the Patents Act, 1970?
• Is evidence of enhanced therapeutic efficacy required for patentability of a new form of a known substance?
• Does the denial of patent protection contravene India’s obligations under TRIPS or other international agreements?
• Can pharmaceutical companies obtain secondary patents for new forms of known drugs (evergreening)?

Law (Relevant Statutes, Precedents, and Legal Doctrines)

• Patents Act, 1970: Section 3(d) (bar on patenting unless ‘enhanced efficacy’ is demonstrated); Section 2(1)(j) and (ja) (definition of ‘invention’ and ‘inventive step’).
• TRIPS Agreement: Article 27 (patentable subject matter), Article 7 (objectives), Article 8 (principles).
• Precedent Cases: No direct Indian precedent; interpretation based on comparative principles and legislative intent.
• Doctrine of Evergreening: Practice of seeking multiple patents on slight modifications of existing drugs to extend monopolies, debated globally.

Arguments by Novartis AG (Appellant)

• Patentability of the Beta Crystalline Form

Novartis argued that the beta crystalline form of Imatinib Mesylate was a new and patentable invention, distinct in structure, properties, and stability from the known “free base” form of Imatinib. It claimed enhanced bioavailability (30% more absorption) and improved stability, satisfying the test of novelty, inventive step, and industrial applicability under Sections 2(1)(j) and 2(1)(ja) of the Patents Act.

• Interpretation of Section 3(d)

The company contended that Section 3(d) was intended only to prevent frivolous modifications of known substances, not to bar genuine incremental innovation. It urged the Court to interpret “efficacy” broadly — to include physical and pharmacological advantages (like improved bioavailability), not merely therapeutic outcomes.

• TRIPS Compliance

Novartis argued that India’s restrictive interpretation of Section 3(d) violated Article 27(1) of the TRIPS Agreement, which requires patents to be granted for any inventions that are new, involve an inventive step, and are capable of industrial application.

It submitted that TRIPS does not allow member states to add extra patentability conditions like “enhanced efficacy.”

• Constitutional Challenge

Novartis contended that Section 3(d) was arbitrary and vague, thus violating Article 14 (Equality before Law) of the Indian Constitution.

The term “efficacy” was argued to be undefined and uncertain, allowing subjective interpretation by the Patent Office, creating discrimination between inventors.

• Encouragement of Innovation

The company emphasized that denying protection to incremental pharmaceutical innovations would discourage research and development, particularly in drug formulation.

Novartis highlighted the global importance of innovation-driven IP regimes and claimed India risked being seen as hostile to innovation.

Arguments by the Respondents (Union of India, NGOs, and Generic Manufacturers)

• Lack of Enhanced Therapeutic Efficacy

The Government and public health groups argued that the beta crystalline form did not improve therapeutic efficacy — it merely improved storage, stability, and bioavailability.

They asserted that Section 3(d) specifically requires demonstrable enhancement in therapeutic effect, not minor improvements.

• Purpose of Section 3(d) – Preventing Evergreening

Respondents explained that Section 3(d) was enacted intentionally during the 2005 amendment to prevent “evergreening” — the practice of extending monopolies by patenting trivial variations.

The legislative intent was to balance IP protection with access to affordable medicines in a country with significant public health needs.

• Conformity with TRIPS

The government maintained that Section 3(d) is TRIPS-compliant, as TRIPS allows nations to design patent laws according to their public health priorities.

It cited the Doha Declaration on TRIPS and Public Health (2001), which explicitly affirms members’ rights to safeguard access to medicines.

• Public Interest and Right to Health

NGOs and patient advocacy groups stressed that granting the patent would block generic production of Imatinib Mesylate, drastically raising drug costs (from ₹8,000/month for generics to ₹1.2 lakh/month for Glivec).

They argued that this would violate Article 21 (Right to Life) by restricting access to essential medicines.

• Clarity of Section 3(d)

The respondents asserted that the language of Section 3(d) was clear when read with its explanation: only substances showing enhanced therapeutic efficacy qualify.

They cited the legislative debates and Patent Office Manual to show the clause was drafted to protect against monopolistic abuse, not to confuse inventors.

Court’s Observations Supporting the Arguments

The Supreme Court noted that while Novartis’s product showed improved properties, it failed to show any clinical or therapeutic superiority. The Court accepted the legislative intent behind Section 3(d) as a public health safeguard and upheld its constitutional validity. It clarified that India’s approach does not violate TRIPS, since the Agreement allows domestic discretion in defining patentability standards.

Analysis

The Supreme Court’s decision in Novartis AG v. Union of India stands as a critical turning point in the interpretation of India’s patent laws, particularly Section 3(d) of the Patents Act, 1970. In its analysis, the Court distinguished between physical/chemical improvements and actual therapeutic advance, stating that only modifications yielding a demonstrable improvement in treatment outcomes would satisfy the law’s requirements. The Justices emphasized that, for pharmaceutical products, “efficacy” refers specifically to therapeutic efficacy, rejecting broader interpretations that might include bioavailability, stability, or any property useful to manufacturers.

This narrow approach to “enhanced efficacy” signified India’s commitment to protect public health and the generic drug industry over commercial interests of multinational pharmaceutical companies. While acknowledging Novartis’s argument that incremental innovation drives medical progress, the Court insisted that patent protection cannot be afforded to minor or trivial modifications designed primarily to extend monopolies (i.e., evergreening).

A notable outcome of the case was the affirmation that India’s patent regime may adopt stricter standards for pharmaceuticals than required by TRIPS. The Court’s rationale aligned with the Doha Declaration, which supports member states’ rights to set patent rules according to domestic health priorities, thus ensuring millions of Indian and global patients have access to affordable medicines.

Scholars and commentators argue that, although the Court’s interpretation may slow down secondary patenting and potentially discourage some pharmaceutical innovations, it strikes a necessary balance between the prevention of abuse via evergreening and the continued support for genuine drug improvement. The judgment served as binding precedent in subsequent disputes, and has reinforced India’s global reputation as a leader in generic drug accessibility.

Conclusion 

The Supreme Court dismissed Novartis’s appeal, holding that the beta crystalline form of Imatinib Mesylate did not demonstrate therapeutic efficacy beyond known forms, as required by Section 3(d) of the Patents Act, 1970. The Court affirmed that improvements in physical and chemical properties alone, such as stability and bioavailability, are insufficient for patentability unless they directly improve treatment outcomes.

This ruling:

• Prevented “evergreening” of pharmaceutical patents in India.
• Enabled generic manufacturers to continue producing affordable Imatinib Mesylate, benefitting public health and patient access.
• Set a precedent for interpreting patent law in favor of genuine innovations and aligned India’s approach with public health priorities and international obligations