Case brief: Natco Pharma Limited v Assistant Controller Of Patents

Introduction 

The case concerns a writ petition filed by Natco Pharma Ltd. against the order dated December 14, 2022, issued by the Assistant Controller of Patents and Designs. Natco challenges the grant of Indian Patent Application No. 4412/DELNP/2007, which was filed by Novartis AG on June 8, 2007. The petitioner alleges that the Assistant Controller’s decision was made without adhering to proper procedural requirements, notably the principles of natural justice.

The context involves a pre-grant opposition filed by Natco against Novartis’ patent application, raising issues about the patentability of certain claims under the Patent Act. Natco contends that they were not given adequate notice or opportunity to present their case during key proceedings, particularly a hearing held on December 2, 2022, which led to the decision being challenged in court. The petition was heard by the Honorable Justice C. Hari Shankar, who expressed concerns regarding the fairness of the proceedings and the potential implications of the Assistant Controller’s actions on the rights of opposing parties.

Ultimately, the court emphasized the importance of transparency and adherence to natural justice in patent proceedings, which are significant given the stakes involved in patent rights and innovation. 

Facts of the case 

The key facts of the case between Natco Pharma Ltd. and the Assistant Controller of Patents regarding Novartis AG’s patent application are as follows:

1. Patent Application: The application for the patent in question, Indian Patent Application No. 4412/DELNP/2007, was filed by Novartis AG on June 8, 2007.

2. Pre-grant Opposition: Natco Pharma Ltd. filed a pre-grant opposition against this patent application, asserting that it should not be granted due to various reasons, including issues related to patentability under Section 3(d) of the Patent Act.

3. Hearing Events: The learned Assistant Controller conducted a hearing on September 5, 2022, where both Natco and Novartis were present. However, shortly thereafter, the Controller unilaterally scheduled another hearing on December 2, 2022, specifically inviting Novartis without notifying or involving Natco in this process.

4. Lack of Representation: Natco was not informed about the December 2 hearing and, consequently, was unrepresented when the Assistant Controller heard submissions solely from Novartis.

5. Order Issuance: Following the hearing on December 2, Novartis submitted written arguments on December 14, 2022. On the same day, the Assistant Controller issued the challenged order granting the patent to Novartis without considering Natco’s objections, which raised serious concerns about procedural fairness and the natural justice principle.

6. Legal Challenge: Natco filed a writ petition under Article 226 of the Constitution of India, asserting that the Assistant Controller’s decision to grant the patent undermined their rights as an opponent and was issued without adherence to the proper legal procedures, thereby breaching principles of natural justice.

7. Concerns Raised: The contention primarily revolves around whether Natco was given a fair opportunity to contest the patent application, particularly in light of the Assistant Controller conducting a hearing without their presence and without following the proper procedural obligations. 

Arguments by the parties 

The arguments presented by the parties in the case of Natco Pharma Limited vs. Assistant Controller of Patents focused on various legal and procedural issues surrounding the patent application filed by Novartis AG. Here are the key arguments from both sides:

Arguments by Natco Pharma Ltd.:

1. Violation of Natural Justice: Natco argued that the Assistant Controller’s decision to hold a hearing on December 2, 2022, without notifying them constituted a breach of the principles of natural justice. They contended that such unilateral hearings are contrary to established legal principles that require both parties to be present in adversarial proceedings.

2. Right to Oppose: Natco emphasized their right as a pre-grant opponent to be involved in all stages of the patent proceedings. They claimed that excluding them from the hearing effectively undermined their legal standing and rights to contest the patent application, as their objections were not considered.

3. Procedural Inconsistencies: Natco pointed out that the procedural delays and the lack of a timely decision by the Assistant Controller contradict the directions given by the court in previous judgments regarding the timely resolution of such matters.

4. Merit of Objections: Natco asserted that the claims presented by Novartis were not novel and should not be patentable under the provisions of the Patent Act, particularly Section 3(d), which addresses the criteria for patentability in India.

Arguments by Novartis AG:

1. Compliance with Patent Law: Novartis argued that the patent application complied with all requirements of the Patent Act. They maintained that the claims were novel, inventive, and described adequately in the application, justifying the grant of the patent.

2. Legitimate Hearings: Novartis contended that the Assistant Controller acted within his authority by conducting the hearing on December 2, 2022. They argued that the procedures followed were appropriate and did not warrant re-examination, as the Controller had previously heard their claims.

3. Expert Testimony: Novartis introduced expert affidavits to support their patent claims, arguing that these testimonies demonstrated the innovation and effectiveness of their product, thereby reinforcing their position that the patent should be granted.

4. Focus on Patentability: Novartis maintained that the focus should be on the merits of the patent claims instead of the procedural issues raised by Natco, indicating that their invention provided significant benefits that warranted patent protection.

Court’s Consideration:

The court was tasked with evaluating whether the Assistant Controller’s actions adhered to the principles of natural justice and patent law, particularly focusing on the validity of the actions that led to the exclusion of Natco from critical hearings and whether that exclusion affected the fairness and legality of the patent grant process.

Analysis of the court 

The court’s analysis in the case of Natco Pharma Limited vs. Assistant Controller of Patents focused on several critical factors relating to procedural fairness, adherence to patent law, and the rights of pre-grant opponents. The following key points summarize the court’s analysis:

1. Natural Justice and Procedural Fairness:

– The court emphasized the fundamental principle of audi alteram partem (the right to be heard) as essential in administrative proceedings, including patent applications. It was determined that both parties must be involved in all hearings relevant to their dispute, which was not upheld in this case due to the unilateral hearing granted to Novartis without involving Natco.

– The court expressed that the Assistant Controller’s actions disregarded established norms of natural justice, as Natco was excluded from the December 2, 2022 hearing where significant decisions were communicated to Novartis without their representation. This exclusion was deemed contrary to the fairness expected in judicial processes.

2. Compliance with Directions:

– The court noted that the Assistant Controller failed to comply with specific directions issued following previous hearings, which mandated that he should inform both parties about any amendments to patent claims before a final decision was made. The court found that the order passed on December 14, 2022, which allowed amendments to the claims without notice to Natco, breached these directives.

– The failure to render a timely decision by the stipulated date of November 15, 2022, and instead holding a subsequent hearing only with Novartis was viewed critically. The court highlighted that such actions undermined the procedural integrity of the proceedings.

3. Role of Pre-grant Opponents:

– The analysis recognized the significance of the role played by pre-grant opponents like Natco in patent opposition proceedings. It was noted that such opposition proceedings are meant to aid the examination of patent applications by ensuring that all relevant arguments against a patent’s grant are considered.

– The court stressed that excluding Natco from crucial discussions regarding the patent claims directly contravened the legislative intention behind the Patent Act, which encourages participation of all interested parties in the examination process.

4. No Prejudice Argument:

– The court rejected the argument made by Novartis that no prejudice had resulted to Natco from their exclusion. It recognized the inherent risks and potential impacts on Natco’s rights and interests should the patent be granted without their objections being duly considered.

5. Need for Re-evaluation:

– Given the irregularities in the handling of the case and the significant nature of the issues raised, the court recommended that the matter be re-evaluated. It suggested that the hearing be conducted either by the original Assistant Controller or reassigned to another officer to ensure fairness and adherence to due process in resolving the patent application.

Conclusion:

Ultimately, the court found that the actions taken by the Assistant Controller were procedurally flawed and lacked adherence to the principles of natural justice, necessitating a reconsideration of the patent application with both parties given a fair opportunity to be heard. The court’s decision underscored the importance of transparency and fairness in patent proceedings, reinforcing the rights of opponents in such cases. The writ petition filed by Natco was thus allowed, with instructions for proper reassessment of the application.