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HIGH COURT OF DELHI
MERCK SHARP AND DOHME CORP. & ANR. ... Plaintiff
Through: Mr. Pravin Anand, Ms. Tusha Malhotra and Ms. Pankhuri Malik, Advs.
Through: Ms. Meenakshi Arora, Senior Adv. with Mr. PB Suresh, Mr. Vipin Nair, Mr. Arindam Ghosh, Mr. Sughosh Subramaniam, Ms. Chitra Vats and Mr. Agnish Aditya, Advs.
JUDGMENT
1. This application, by the defendant under Order XXXIX Rule 4 of the Code of Civil Procedure, 1908 (CPC), seeks vacation/modification of the ex-parte ad interim order, dated 21st October, 2020 passed by this Court in the present proceedings. 2021:DHC:2111 IA 7615/2021 in CS (COMM.) 463/2020 The controversy in issue and order dated 21st October, 2020 The Plaint
2. Plaintiff No. 1 - Merck Sharp and Dohme Corporation (who would, for the sake of convenience, be referred to, hereinafter, as “the plaintiff”) has, by the present suit, sought injunction against infringement, by the defendant, of the plaintiff’s Indian Patent NO. 209816 (“IN’816”, in short), whereby the plaintiff’s invention, Sitagliptin, an anti-diabetic drug, stands patented.
3. The date of filing of the international application under the Patent Cooperation Treaty (PCT), for Sitagliptin, by the plaintiff, was 5th July, 2002. By operation of the explanation to Section 53(1)1 of the Patents Act, 1970 (“the Patents Act”), therefore, the patent would expire on 5th July, 2022.
4. The plaint alleges that the defendant was infringing IN’816 of the plaintiff by advertising, for sale, Sitagliptin Hydrochloride in its list of Active Pharmaceutical Ingredients (APIs) and Analytical Standards. Reliance has been placed, in the plaint, on investigations stated to have been conducted by the plaintiff in September, 2020 which, according to the plaintiff, disclosed that the defendant was
53. Term of patent. - (1) Subject to the provisions of this Act, the term of every patent granted, after the commencement of the Patents (Amendment) Act, 2002, and the term of every patent which has not expired and has not ceased to have effect, on the date of such commencement, under this Act, shall be twenty years from the date of filing of the application for the patent. Explanation. -For the purposes of this sub-section, the term of patent in case of International applications filed under the Patent Cooperation Treaty designating India, shall be twenty years from the international filing date accorded under the Patent Cooperation Treaty. exploiting Sitagliptin for commercial use. For this, the plaint cites, by way of evidence, (i) the Product List of the defendant on its website, in which Sitagliptin is reflected under the categories “APIs” and “Analytical Standards”, (ii) the fact that Sitagliptin does not figure among the products under the head “Pipeline” on the defendant’s website, indicating that it was currently being offered for sale, (iii) the coverage, in the category of “APIs”, on the defendant’s website, of Sitagliptin Hydrochloride under the head “Current Product List”, (iv) the listing, by the defendant, on its webpage, of five different isomers of Sitagliptin under the head “Analytical Standards”, (v) the offering, for sale, of Sitagliptin API by the defendant through its business profile on India Mart, Linkedln, TradeIndia, JustDial, Pharma Compass and PharmaAdda, (vi) the “Pre-feasibility report” and “Final Environmental Assessment Report” submitted by the defendant to the Ministry of Environment, Forest and Climate Change and the “Executive Summary Report”, submitted to the Andhra Pradesh Pollution Control Board in January, 2019, in all of which it was claimed that the manufacturing capacity of defendant, for Sitagliptin API would be 10 tonnes per month, after its expansion, and (vii) Export-Import data of the defendant, which reflected that, in 2017, 2018, 2019 and 2020, the defendant had exported Sitagliptin.
5. Additionally, the plaint also relies on personal enquiries stated to have been made, by the investigator engaged by the plaintiff with the defendant. Of these, the only enquiry which may be stated to have any relevance to effecting of sales by the defendant of Sitagliptin is by way of a call to one Mr. Chandra Shaker, Assistant General Manager of Marketing of the defendant, on 21st September, 2020. The plaint alleges that, from the said conversation, the investigator learnt that the defendant had been providing Sitagliptin API for sale in the domestic market and was willing to do so in future as well. It is further alleged that, vide a subsequent e-mail dated 21st September, 2020, Mr. Chandra Shaker provided the investigator the price quotation for Sitagliptin Phosphate API, which was ₹ 1 lakh per Kg.
6. On the basis of the aforesaid averments asserted in the plaint, this Court, vide order dated 21st October, 2020, on the very first date of hearing, observed and held thus: “4. Grievance of the plaintiff in the present suit is to the manufacturing and selling by the defendant of the pharmaceutical composition with the international nonpropriety name Sitagliptin, for which the plaintiff has a valid and subsisting patent. Learned counsel for the plaintiff has taken this Court through the home page of the defendant’s website wherein in the drugs available defendant claims that Sitagliptin is also available, despite the fact that the defendant on its website claims a disclaimer that there may be a patent in favour of third parties in respect of some of the drugs. Further, the plaintiff’s investigator conducted an inquiry as to the availability of the compound Sitagliptin to which a reply was received from the defendant affirming availability of Sitagliptin Phosphate for a sum of ₹1 lakh for 1 Kg. Even on the third party website like India Mart, defendant is advertising the sale of drug Sitagliptin.
5. Considering the fact that plaintiff has a valid and subsisting patent being IN ‘816 for which a certificate of validity has already been granted by this Court, as also the other averments in the plaint and the documents filed therewith, this Court finds that plaintiff has made out a prima facie case in his favour and in case no ex-parte ad-interim injunction is granted the plaintiff will suffer irreparable loss. The balance of convenience also lies in favour of the plaintiff and against the defendant.
6. Consequently, an ex-parte ad-interim injunction is granted in favour of the plaintiff and against the defendant in terms of prayer (i) of Para 6 of IA 9671/2020.”
7. The aforesaid ex-parte ad interim order continues to remain in force till date. Written Statement of the defendant
8. Consequent to issuance of summons, the defendant has filed its written statement by way of response to the plaint. The written statement asserts the fact that the defendant is a 30 year old Research and Development based API Manufacturing Group, with clients spread over 70 countries. Para 4 of the written statement asserts that the defendant is involved in persistent research, so as to make pharmaceutical products available to the common man at reasonable costs. It is further asserted that the activities of the defendant are carried out in complete compliance with patent laws and their dictates.
9. The written statement further asserts that a joint venture was executed between the defendant and M/s Chemo AG Lugano (“Chemo” in short), for development and manufacturing of certain products, so that they could be launched in the market after patent terms expired. This, it is averred, was after obtaining due permissions from Governmental and Drug Control Authorities and within the parameters of patent laws. No manufacture or production of these drugs for commercial purpose was undertaken, the sole intent being to launch them in generic form at affordable price after the patents granted in respect of the APIs in the said drugs expired. The defendant was, therefore, according to the written statement, involved in supplying Sitagliptin Hydrochloride as an API for research and development purpose after having been granted due approval, therefor, by the Drug Control Authorities.
10. The defendant has filed, with the written statement, approvals in Forms 25 and 29, issued under the Drugs and Cosmetics Act, 1940 and the rules made thereunder by the Drug Control Administration, which permits the defendant to manufacture Sitagliptin Hydrochloride, of specified quantities, for export to Switzerland, Spain, Cyprus and the U.K. One such sample certificate, dated 21st September, 2016, permitting export of 52 Kgs of Sitagliptin Hydrochloride by the defendant to Switzerland, may be reproduced thus: “GOVERNMENT OF ANDHRA PRADESH DRUGS CONTROL ADMINISTRATION L.Dis.No.964/JD/DCA/VSP/2016 Dated: 21-09-2016 From To M B R Prasad, M.Pharm, M.Phil, A.I.C. M/s SMS Pharmaceuticals Ltd., Joint Director & Licensing Authority, Unit-VII, Kandivalasa (V), Drugs and Copyrights, Poosapathirega (M), Drugs Control Administration, Vizianagaram District-535204 Visakhapatnam Region, Andhra Pradesh, India. Visakhapatnam. Andhra Pradesh Sir, Sub: Drugs and Cosmetics Act, 1940 and Rules made thereunder – Approval of Specific Export Permission-in Form 25 – Regarding. Ref: 1. Your application dt. 13-09-2016
2. Lr.No.:43-2/HZ/2016-17/844/8992 Dt.09-09-2016 of the Deputy Drugs Controller(I), CDSCO, Hyderabad. With reference to your application cited, you are hereby permitted to manufacture the following product as additional item under your Drug License in Form-25 bearing No.14/VZ/AP/2010/B/R Dt.25-03-2010, Valid upto 24-03-2020 for specific quantity mentioned and to be exported to the country specified. S.No. Name of the Product Quantity Country of Export
1. SITAGLIPTIN HYDROCHLORIDE 52Kg’s SWITZERLAND The above additional product is permitted subject to the following conditions.
1. Detailed particulars of rejects/returned goods if any shall be furnished to this office at once for the purpose of issuing necessary orders in such cases. Till such time, the goods shall not be altered/disposed of in any other manner.
2. The specification/standards asked for by the Importing Country/Firm shall be complied with while exporting the drugs.
3. The federal regulations of the importing country shall be fulfilled while exporting/supplying the drugs.
4. The batches to be exported shall undergo quality control testing at your laboratory or at destined site. L.Disc.No.964/JD/DCA/VSP/2016 Approval of (One) Additional Product to M/s SMS Pharmaceuticals Ltd., Unit-VII, Kandivalasa(V), Poosapathirega (M), Vizianagaram District, Andhra Pradesh, India in Form-25 bearing No.14/VZ/AP/2010/B/R/ Dt.25-03-2010, Valid up to 24-03-2020.
5. You are required to ensure that the entire quantity of the drug(s) manufactured on the basis of the above NOC is exported and no part of it is diverted for domestic sale in India through a declaration in the form of an affidavit or Non-judicial stamp paper.
6. You are requested to submit the information pertaining to quantities of drugs manufactured and exported to the state licensing authority and Zonal Sub Zonal of CDSCO after completion of the export under this approval.
7. You shall ensure that the drug(s) manufactured on the basis of NOC given as per your Export order is exported and that no part of it is diverted for Domestic sale in India.
8. On the event of the relevant Export order being cancelled, you shall ensure physical destruction of all un-exported quantity of the drug(s) and shall submit a declaration to CDSCO, Zonal Office, Hyderabad and State Licensing Authority in the form of an affidavit on non-judicial stamp paper.
9. You shall make available for inspection of the appropriate authorities, on completion of the export orders and furnish information to this Office regarding the actual quantities of the drugs produced, details regarding each consignment dispatched, remaining stocks of the drugs and related raw materials and intermediates in hand.
10. You shall ensure that the drug for which “NOC” has been given shall cease to be manufactured or exported if the drug is prohibited in future in the country or in the importing country. In case of Narcotics/Psychotropic Drugs, you are also directed to approach The Narcotic Commissioner of India, 19th The Mall Morar, Gwalior-6 so far as the revisions of the NDPS Act and the Rules are concerned in the matter. Further you are informed that non-compliance of any the conditions mentioned above the matter will be reviewed and the licenses/permissions issued herewith are liable for Suspension/cancellation for which you may take this as a notice under Rule 85(2) of the Drugs and Cosmetics Rules. You are therefore requested to plan your production accordingly. Yours faithfully, Sd/- JOINT DIRECTOR & LICENSING AUTHORITY DRUGS CONTROL ADMINISTRATION VISAKHAPATNAM”
11. The defendant, in the written statement, claimed never to have sold Sitagliptin Hydrochloride in commercial quantities or to any clients who are using it for commercial purposes. Every sale, it is submitted, was duly licensed by the Drug Control Authorities. All exports to Spain, Switzerland, Cyprus and U.K., it is further asserted, were only for testing/research/development purposes. Domestic sales of Sitagliptin Hydrochloride were also only for the said purpose.
12. The written statement presses into service Section 107A of the Patents Act, along with the judgment of this Court in Bayer Corporation v. U.O.I.2, to contend that the activities of the defendant were permissible, as the defendant was only engaged in sale and 2019 (78) PTC 521(DB) export of Sitagliptin Hydrochloride for the purposes of research and development. The written statement has also dealt, point-by-point, with the various results, cited by the plaintiff as having been obtained consequent on investigation, to demonstrate that these results do not, in any way, indicate that the defendant was selling Sitagliptin Hydrochloride for commercial purposes or in commercial quantities. Section 107A of the Patents Act reads thus: “107A. Certain acts not to be considered as infringement. – For the purposes of this Act, – (a) any act of making, constructing, using, selling or importing a patented invention solely for uses reasonably related to the development and submission of information required under any law for the time being in force, in India, or in a country other than India, that regulates the manufacture, construction, use, sale or import of any product; (b) importation of patented products by any person from a person who is duly authorised under the law to produce and sell or distribute the product, shall not be considered as an infringement of patent rights.”
13. Para 53 of the written statement draws specific attention to a disclaimer, contained on the website of the defendant, which reads thus: “Some of the products may have patent rights in one or more countries and any such product having an existing patent will not be offered/sold for commercial requirements. The final responsibility with respect to third party patent rights lies exclusively with the buyer.” (I may note, here, that, though the plaint also acknowledges the existence of this disclaimer, the plaintiff has alleged that the disclaimer is merely in the nature of a tactic to enable commercial exploitation, by the defendant, of Sitagliptin Hydrochloride.) Pleadings in the present application
14. By the present application preferred under Order XXXIX Rule 4 of the CPC, the defendant has sought modification/vacation of the ex parte interim order dated 21st October, 2020 (supra), citing in their favour Section 107A of the Patents Act. The defendant has annexed, with the application, the following communication dated 17th June, 2021, from VERBEN AG, Lugano, Switzerland to the defendant: “VERBEN AG, Lugano Branch Via Pelli 17 6900 Lugano Switzerland SMS Pharmaceuticals Ltd. Plot. No. 72, H. No. 8-2-334/3 & 4, Road No. 5. Opp. SBI Executive Enclave, Banjara Hills, Hyderabad, Telangana – 500 034 INDIA Letter Agreement regarding supply of Sitagliptin API for R&D purposes As you are aware Verben AG (the “Company”), has an existing purchase order (VL- 21/00094) regarding Sitagliptin active pharmaceutical ingredient from SMS Pharmaceuticals. The ordered quantities are for the exclusive purpose of research and development activities with a view to obtaining marketing authorizations or other regulatory approval of medicinal products (the “Research Quantities”). The Research Quantities will only be used for the purpose of the research and development activities which are the practical requirements for obtaining marketing authorizations. However, we have already suffered significant delay in the delivery of the Research Quantities. If the aforementioned order for the Research Quantities is not dispatched forthwith, this order will regrettably have to be cancelled and we will need to find an alternate supplier. Signed for and on behalf of the Company by: Names: Mr. Stefano Vanossi and Mr. Paolo Limido Date: 17 June 2021”
15. The defendant in its application re-asserts its stand in the written statement that the defendant was engaged in dealing with Sitagliptin Hydrochloride as an API, in non-commercial quantities, after obtaining requisite approvals from the Drug Control Authorities for research and development purposes. This is sought to be demonstrated, inter alia, by a comparison of the quantities permitted to be sold/exported by the Drug Control authorities, vis-à-vis the quantities actually sold/exported by the defendant, which is represented in a tabular form:
┌─────────────────────────────────────────────────────────────────────────────────┐ │ Dispatched │ │ Licensed │ │ Sl. Name of the Customer P.O and Quantity Domestic/Exported │ │ Quantity │ │ No. Customer Date P.O Quantity Invoice Country │ │ (In KG) │ │ wise │ │ 2016 │ │ CS-16/05929-PO │ │ M/s. Chemo AG │ ├─────────────────────────────────────────────────────────────────────────────────┤ │ 1. Dt:13.07.2016 52.0 20.0 Export │ │ Lungo Branch │ └─────────────────────────────────────────────────────────────────────────────────┘
C. HARI SHANKAR, J.