Follow-on Patent Registration: in light of Shogun Organics Case

(By Manas Vridhi (manas.v@lsdavar.in) and Shruti Gupta (Shruti.g@lsdavar.in)

While the terms “ever-greening patent” and “follow-on patent” are both used to refer to patents
that protect pharmaceutical formulations, new forms of active agent, processes for
manufacturing active agents, new uses for pharmaceutical products, new combinations of
active agents, new dosing regimens etc. Follow-on pharmaceutical innovation are referred as
those inventions that seeks to improvement upon existing pharmaceuticals and their use in
treating patients.

Patents on follow-on innovation are often derided as “secondary” patents, with the implication
that the underlying inventions are somehow lesser in nature than the subject matter claimed in
“primary” patents, i.e., the drug active ingredient per se. While implicitly acknowledging the
legitimacy of primary patents, critics of so-called secondary patents contend that patents on
follow-on innovation allow drug innovators to “evergreen” their products, i.e., to extend the
period of patent exclusivity beyond the expiration of any original patent on the drug active
ingredient, and in doing so contribute to the high cost of drugs, thereby limiting the ability of
patients to access the drugs upon which they have come to rely. But still there is no judgment
delivered to set a precedent in this regard.

Recently, Delhi High Court delivered a judgment that could be set as an example in this
contesting aspect of pharmaceutical patent. In the case of “Shogun Organics Limited v. Gauri
Hari and Others” where the facts go as that the Shogun Organics Limited (plaintiff) filed a
suit seeking a permanent injunction to restrain the defendants from infringing its process patent.
The patent relates to the manufacturing of d-trans “Allethrin” (an active ingredient in mosquito
repellants). Shogun had also obtained an ‘original’ registration for the manufacture of this
product under the Insecticides Act, 1968. The claim of the Plaintiff in the case was that it
researched and developed a six-step process for synthesis of d-trans Allethrin, which is an
insecticide. The explanation of the process is given in the specification and the claims. The
patent was applied for on 10th May, 2007 and the date of grant was 13th November, 2009. But
the defendant was manufacturing and selling a product under the brand name “Maxo”. The
Plaintiff got certain tests conducted and found that there were various marker compounds, as
also specific impurities which were unique to the Plaintiff‟s process. The Plaintiff also found
that the isomer content was also similar to that of the Plaintiff‟s product, thus, the Plaintiff
concluded that the Defendants were using the patented process. Accordingly, the Plaintiff filed
a suit seeking a permanent injunction restraining infringement of its patent, as also damages/
rendition of accounts.

The court held that unless the defendants could prove that patent was disclosed to the
authorities under the Insecticides Act, the patent was not prior published. However, the
defendants failed to provide any evidence to prove this. The court also held that such a
disclosure would not constitute ‘public disclosure’ since (a) Section 30 of the Patents Act
exempts disclosures to the government and (b) disclosure was without any public (non-secret)
use. The court disregarded the submissions on the Insecticides Act since the patented process
was not connected to the insecticides registrations as the plaintiff had developed a new process
which was different from the one that was disclosed while obtaining its insecticides
registration.

Follow on or ‘me too’ registrations under the Insecticides Act have been a topic of controversy
in India especially with respect to data exclusivity. As per Section 9(3) of the Insecticides Act,
the original applicant of an insecticide must file an application disclosing various technical
details of the proposed insecticide. After scrutiny, the applicant is awarded a registration as the
‘original’ manufacturer / registrant. Thereafter, any other person who desires to manufacture /
import the same insecticide can do so by obtaining a ‘follow on’ registration under Section
9(4). As per the clarification from the CIBRC, it appears that a ‘follow on’ registrant must
follow the same process of manufacture as the original registrant in order to make the same
product with the same chemical composition. While the Patents Act grants exclusivity to a
patentee over the patented process, the Insecticides Act appears to permit copying of patented
processes.

Examining a similar issue, the Kerala High Court held that the Insecticides Act and the Patents
Act are independent statues and the authority under the Insecticides Act does not have the
power to examine issues of patent infringement / validity. However, the court did not address
the apparent conflict between the two laws.

It is a settled principle of statutory interpretation that in order to prevent absurd results, the two
conflicting provisions of law should be read together and where necessary be modified so as to
reconcile the respective provisions and to give effect to both of them.
While the process patent of the original registrant can be enforced to prevent the follow on
registrant from using the patented process, the follow on registrant will continue to hold a valid
registration under the Insecticides Act.

The judgement also failed to address that what is the point of the insecticides registration which
continues to be valid even after a permanent injunction under the Patents Act? In order to
reconcile this conflict, could the court have required the ‘follow on’ registrant to (a) obtain
consent of the original registrant for using its patent process or (b) obtain an order of invalidity
of the patent, prior to granting the registration? If nothing else, can patentees legitimately use
follow on registrations as a ground for showing a real and imminent threat to their patent and
file suits seeking ‘quia timet injunctions’ i.e. injunctions based on a fear of infringement
without any actual infringement.