Professor Shamnad Basheer (National University of Juridical Sciences, Kolkata) is an IP Osgoode Research Affiliate and is also the founder of SpicyIP, a leading blog dedicated to analyzing IP and innovation policy news and cases from India.
Glivec, a path-breaking anticancer drug by Novartis propelled Indian patent law onto the world stage in an interesting theatre involving TRIPS and the yet unresolved issue of pharmaceutical patents and their impact on access to medicines.
In 2006, the Indian patent office rejected a patent application covering Glivec (or ‘Gleevec’ as it is known in the United States). The rejection stemmed, inter alia, from a unique section in the Indian patent regime (section 3(d)) that prohibits the patenting of new forms of existing pharmaceutical substances that do not demonstrate significantly enhanced “efficacy.”
Not only did Novartis appeal the patent office decision, but in a rather controversial move, it challenged the TRIPS compatibility and constitutionality of section 3(d). The Madras High Court ruled that section 3(d) was constitutional. It also held that it did not have jurisdiction to rule on the TRIPS issue.
A recent paper of ours (Shamnad Basheer and Prashant Reddy, “Ducking” TRIPS in India: A Saga involving Novartis and the legality of Section 3(d), (2008) 20(2) National Law School of India Review), available for download at SSRN <http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1329201> critically examines the constitutionality and TRIPS compatibility issues thrown up by section 3(d). It argues that the Madras High Court was right in defending the constitutionality of section 3(d). It also goes on to demonstrate that section 3(d) is compatible with TRIPS.
However, it questions the court’s “ducking” of the TRIPS issue by claiming that it lacked “jurisdiction” on this count. In particular, it critiques the reasoning of the court on this count and argues that the court ignored a number of sound Indian precedents in favour of outdated case law from abroad.
More specifically, it argues as below:
“The Madras High Court avoided making a determination on the TRIPS issue by holding that it did not have jurisdiction in this regard. It noted that the proper forum to bring this before would be the Dispute Settlement Body (DSB), a body under the WTO (World Trade Organisation) Agreement.
Interestingly, it used a “contractual” approach to justify its lack of jurisdiction i.e. it held that an international treaty such as TRIPS amounted to a contract between nations and that this contract provided that the WTO DSB shall have exclusive jurisdiction to determine TRIPS non compliance issues. Therefore no national court could decide such an issue.
The Madras High Court was wrong in relying on an overly simplistic “contractual” framework to assess whether or not a domestic court could enforce an international treaty. Rather, it ought to have assessed this issue from the vantage point of constitutional law i.e. Supreme Court precedents suggest that keeping in line with a “dualist” tradition, the Indian constitution precludes the applicability of a “direct” effects theory of international treaties in India.
As per “jurisdictional” terms agreed to by member states in the Dispute Settlement Understanding (DSU), the dispute settlement board (DSB) could resolve any disputes between member states regarding any of the WTO Agreements, including TRIPS. However, it is important to note a critical distinction between a “jurisdictional” clause that forces scofflaw member states to subject themselves to the jurisdiction of the WTO and one that clearly excludes any other forum from having jurisdiction. Whilst the DSU supports the former, it does not endorse the latter, as explained below.
The WTO provides some level of “automacity” by ensuring that once a member state complains of a WTO violation to the DSB, the defendant member state has to subject itself to the jurisdiction to the WTO. This is made clear by Article 23.1 of the DSU which gives member states the right to have recourse to the WTO dispute settlement mechanism, when faced with an allegedly WTO inconsistent measure adopted by another member state.
However, Article 23.2 qualifies Article 23.1 by stating that “…in such cases, members shall not make a determination to the effect that a violation has occurred, that benefits have been nullified or impaired or that the attainment of any objective of the covered agreements has been impeded, except through recourse to dispute settlement in accordance with the rules and procedures of this Understanding….”
As can be seen from the above, Article 23 prevents a complaining member state from unilaterally determining that there has been such a WTO violation. In other words, the Swiss government (home government of Novartis) cannot unilaterally determine that section 3(d) violates TRIPS. However, nothing in Article 23 of in the DSU or any of the WTO agreements prevents an Indian court from making such a determination.
In other words, India or any other defendant member state is free to give what is commonly termed as a “direct effect” to its international obligations and provide complaining member states or their nationals the option of raising WTO issues before its domestic courts. Nothing in the WTO Agreement prevents this.
The Madras High Court was therefore wrong in holding that it lacked jurisdiction to entertain the TRIPS challenge by Novartis, since the WTO/TRIPs agreement provided for an exclusive dispute settlement mechanism. Rather, it ought to have held that its inability to strike down section 3(d) as contravening TRIPS stemmed from the fact that Indian law did not permit the “direct enforcement” of international treaties.”
For those interested in a more “patent” centric discussion of the Novartis case and section 3(d), we have an article titled “The ‘Efficacy’ of Indian Patent Law: Ironing out the Creases in Section 3(d)” (Volume 5, Issue 2, Script-ed, August 2008). This article is available for download on SSRN as well http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1086254