India: 'Audi Alteram Partem', Yes, But Not For Opponent In Patent Examination Proceedings!

Introduction

Patent rights are described as ‘exclusive-limited period monopoly rights' that allows the patent holder to exploit their invention and in turn prevent third parties from commercially exploiting the invention. The timer starts from the date on which an applicant submits their patent application before the respective patent office and is valid for twenty (20) years from such date of application. The patent applicant will be called a ‘patentee' only after the patent application is granted by the patent office. Every patent application undergoes scrutiny or examination as prescribed under law to ascertain the patentability of the invention. The law also permits third parties to oppose the patent application before or after the grant of patent. However, in the pre-grant opposition proceeding, the extent of participation of the Opponent has been a matter of debate. While pre-grant oppositions were considered as an aid to the examination by the Patent office, there was some ambiguity as to how the two proceedings, examination by the Patent office and the pre-grant opposition proceedings were to proceed, whether parallelly or would they converge.

In the judgment of the Division Bench (Two-Judge Bench) of the Delhi High Court (DHC) in the matter of Novartis AG v. Natco Pharma & Anr. (2024: DHC: 04-DD) dated 9 January 2024, the Court held that the examination process serves a wider and significant objective as it involves an in-depth assessment of the patent application, ensuring it complies with the statutory requirements for patent approval and facilitates a thorough and independent evaluation of the application by the examiner and the Controller. Therefore, a clear distinction between the examination and the opposition process is essential and merging these distinct processes would render the entire system unwieldy and counterproductive quite apart from negatively impacting the legislative policy of expeditious consideration.

Facts:

Novartis AG (Novartis) applied for a patent before the Indian Patent Office under a patent application 4412/DELNP/2007 which was eventually granted in the year 2022 with patent no. IN414518 (patent). Natco pharma (Natco), was one among 10 opponents, who filed a Pre-grant Opposition (PGO) in 2016, alleging lack of inventive step, non-patentability, insufficiency of disclosure, and failure to disclose information under Section 8 of Patents Act, 1970 (Act). In 2021, Natco sought to cross-examine experts of Novartis as their affidavits were relied upon by Novartis. When this application was not taken note of by the Controller, Natco filed a writ, W.P. (C) 5558/2021, (first writ) challenging the same before the DHC. The first writ was disposed of on 27^th May 2021, with a direction to the Controller to consider and dispose of the expert cross-examination application by Natco. In furtherance of the order of the DHC in first writ, the Controller considered and rejected the expert cross-examination application of Natco. This was again challenged by Natco in writ, W.P. (C)-IPD 91/2021 (second writ). The second writ was disposed of on 12^th July 2022 with Natco being allowed to file expert affidavits to rebut the expert evidence of Novartis. Following this, the Controller concluded hearing all PGOs on 3^rd November 2022. The Controller further issued a notice to Novartis to amend its patent application on 25^th November 2022 and fixed a hearing on 2^nd December 2022 to hear Novartis on the suggested amendment. The hearing was held as scheduled and an amended set of claims were submitted by Novartis on 5^th December 2022. Novartis was ultimately granted a patent for their patent application on 14^th December 2022 after 16 years from the date of application of suit patent. Aggrieved by the grant, Natco approached the DHC with a writ, W.P.(C)-IPD 2/2023 (third writ), alleging violation of Principles of Natural Justice (PNJ) and that the patent was granted without an opportunity of hearing for Natco and that the final set of amended claims were not notified by the Controller to those who had filed the PGOs. Allowing the third writ, on 12^th January 2023, the Single Judge quashed and set aside the grant of the suit patent and remanded the suit patent for reconsideration before the Assistant Controller (impugned judgment).

Aggrieved by the impugned judgment, Novartis filed a Letters Patent Appeal (LPA) before the Division Bench (DB) of DHC to decide on the issue as to what extent a pre-grant opponent was to be involved in a proceeding initiated by the Controller requiring the applicant for a patent to amend or modify the patent application. Admitting the LPA the DB stayed the impugned judgment further directing the Novartis to maintain accounts of its expenses and sale.¹ The final judgment of the Division Bench is discussed hereinafter in detail.

Issue:

Whether the opponent has a right to be heard that would extend their participation where the amendment to a patent application was prompted by a directive of the Controller issued during the examination process before such Controller for a patent application?

Relevant provisions for this discussion:

• Sections 25, 57, and 117A of the Patents Act, 1970 (Act)
• Rule 55 of the Rules.

Novartis' contentions:

Novartis contended that the Single Judge erred in considering the theory of merging the examination and opposition proceedings and was therefore wholly untenable.² It was further contended that the workings of Sections 12 to 15 of the Act (under Chapter IV of the Act) read with Rules 24B, 28 and 28A of the Rules, dealing with “examination procedure” are distinct from the “opposition procedure” as provided for under Sec 25(1) of the Act read with Rule 55 of the Rules. Novartis stated that the representations of opposition³ acts only as an aid to examination process and does not envisage hearing or participation of the opponent in such proceedings let alone claim audience to the amendment to patent application as suggested by the Controller to the patent applicant in the examination proceedings.⁴ Novartis stated that grant or refusal of patent is an independent statutory duty of the Controller, not contemplative of opportunity of hearing granted to the opponent.

Relying on an array of judicial precedents, Novartis further submitted that prior to 2005 Patent Amendment Act, “any interested person” could file a PGO under Sec 25(1) followed by preferring an appeal under Sec 117A of the Act, however, the 2005 Patent Amendment Act bifurcated “pre-grant” and “post-grant opposition” wherein “any person” and “person interested”,⁵ respectively, are to raise objections against a patent application under Sec 25(1). It was submitted that the provisions of the Act must be given purposive interpretation to give effect to the legislative intent and policy. Towards the same Novartis further submitted that if an opponent fails to challenge a patent application at pre-grant, then, on showing that they are “persons interested”⁶ they can file a post-grant opposition⁷ and further on, the Act provides under Section 117A to appeal to the High Court for revocation of patent under Section 64 of the Act. Therefore, it was contended that the Act provided for sufficient efficacious alternative remedy for the opponents to exhaust. It was also contended that Rule 55 clearly provides that both examination and opposition proceedings happen simultaneously and that that Courts have provided a note of caution against “serial oppositions” who abuse the opposition proceedings provided under the Act by filing oppositions until the day the controller grants a patent to the patent applicant!⁸ Novartis summed up their arguments by highlighting the difference between voluntary amendments, as provided for under Section 57(1) and (2) read with Rule 81 and 82 of the Act and Rules respectively, and amendments as suggested by the Controller, as provided under Section 14 and 15 read with Rule 55(5) of the Act and Rules respectively.⁹

Natco's contention:

Natco contended that a PGO under Section 25(1) can be is filed until the patent is granted and that the opposition proceedings gets merged and lis becomes adversarial therefore PNJ is to be applied as any other lis. Natco admits that the opposition representations aid the controller in examination of patent applications and therefore submits that they are entitled to be part of the examination proceedings. Therefore, Natco submitted that, decision on whether amendments to patent application are required or not is connected to inquiry held under Rules 55(3) and 55(5) of the Rules. Natco further relied on Ayyangar Committee Report and submitted that post-grant legal proceedings are expensive and therefore deter opponents from filing the same and that the question was to balance delay in grant of patent to that of benefit to the public in the event of a successful opposition.

Decision of the Division Bench:

The Division Bench (DB) made several observations before arriving at the decision. The DB analysed the examination proceedings and noted that the power of the Controller to independently frame and issue directions to the patent applicant for an amendment of the application flows from Section 14 of the Act. Analysing opposition proceedings, the DB noted that the term “any person” as provided for under Section 25(1) of the Act is not the same as “person interested” as provided for under Section 25(2) of the Act. The DB further extensively discussed on the opposition representations filed by an opponent and the amendment to patent application. The DB stated that the Controller can either reject the opposition representation or require applicant to amend specification. The DB noted that appeal under Section 117A can only be made for post-grant oppositions made under Section 25(4) and not under Section 25(1) of the Act. It was also noted that post-grant oppositions are not heard or decided by the Controller but by the ‘opposition board' set-up by the Controller.

The DB observed that the process of examination is inclusive and collaborative in nature and is an independent process before the Controller altogether and that opposition representations are an open and participatory exchange to ensure evaluation process benefits from view of diverse body of opponents. Therefore, opposition proceedings are merely an aid to the examination process thereby terming opposition proceedings as adversarial in incorrect. It was further stated that it is essential to uphold the independence of the Controller to uphold credibility of patent system so as to ensure decisions of Controller are impartial and based on merits rather than on external influences. The DB strongly noted that just as how a mere rejection of opposition will not result in grant of patent, similarly, where no opposition is filed it will also not result in automatic grant of patent. It was also noted that when the legislative intent under Chapter IV of the Act was not to confer participative right on opponent in examination process, it will be erroneous to apply the theory of merger in this context as both examination and opposition proceedings have different objective to fulfil the same goal of ensuring grant of patent to only deserving patent applicants. The DB provided an interpretation to the ‘hearing' provided for under Rule 55 and stated that as per sub-Rule (3) only after the Controller is satisfied that opposition representation raises substantial questions and is worthy of consideration does the Controller issue notice of the same to the patent applicant who can then file their statement and evidence. A ‘hearing' under Rule 55 is confined to opposition representation alone and no other submission or proceedings. Therefore, it was further stated by DB that if every opponent is to be recognised to have right to participate in examination proceedings, then that would derail the statutory process and adversely impact expeditious conclusion of the process of grant of patent application as provided for under Section 43 of the Act.

The DB later compared the examination and opposition proceedings in United Kingdom (UK) stating that Section 21(2) of the UK Patent Act 1977 specifically excludes third parties from being part of the examination proceedings before the Comptroller. Similarly, it was also noted that Part IV of the European Patent Convention (EPC) while providing for the rights of the third party to present its observations, clearly distinguishes between rights of opponents in pre and post grant stage of the patent process. Therefore, it was noted that EPC does not acknowledge the right of an opponent to be heard during examination proceedings.

The DB noted that the observations made in Ayyengar report were made in the context of Patent Enquiry Committee recommending deletion of opposition proceedings altogether and not in the context as quoted by Natco in their arguments. The DB held that the precedent as laid down in the cases of Snehlata C. Gupta¹⁰ and UCB Farchim¹¹ are correct in holding that remedy under Section 25(2) of the Act constitutes adequate safeguard for rights claimed by ‘person interested'. The DB further held that the Single Judge had erred in holding that the examination and opposition proceedings merge and reach a point of convergence merely because both proceedings move parallelly would not lend credence to argument of convergence. The DB went on further to advice that the patent office formulate and adopt measures to facilitate speedy consideration of patent applications as provided for under Section 43 of the Act.
The DB summed up their entire findings as conclusion at para 128 of the Judgment.
The key take ways are as follows:

1. The main function of the Patent office is to review patent application through a thorough examination process.

2. When it comes to examination proceedings:

3. When it comes to opposition proceedings:

The hearing provided for under Rule 55(5) is solely in connection with the opposition representation and not in related to the examination proceedings.

The DB emphasized that a patentee's power to prevent delays or derailments must be weighed against the standards of natural justice and that the rights of ‘interested parties' are already protected by the post-grant opposition and revocation procedures. The observations, ruling and directions in this Judgment ensures to throw light on an effective processing of pre-grant oppositions while also safeguarding the interests of all interested parties by differentiating between examination and opposition procedures thereby crystalizing the workings of the provisions of the Indian Patent laws.

Footnotes

1. LPA 50/2023, Order dated 19^th January 2023

2. Para 13 of the Judgment

3. Rule 55 of the Rules.

4. Section 57(6) of the Act.

5. UCB Farchim Sa v. Cipla Ltd & Ors. (2010 SCC OnLine Del 523)

6. J. Mitra & Co. v. Asst. Controller of Patents in S.L.P. (C) No.15727 of 2008

7. Indian Network for People with HIV/AIDS v. F. Hoffman-La Roche in SLP (C) No. 3522/2009

8. Dr. (Miss) Snehlata C. Gupta v. UOI & Ors. (2010 SCC OnLine Del 2374)

9. Haryana Pesticides Manufactures Association v. Willowood Chemicals Pvt. Ltd (2022 SCC OnLine Del 2848)

10. Supra at 8

11. Supra at 5

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