Breaking down the MHC’s recent decision in Embio Ltd. v. Malladi Drugs, SpicyIP Intern Bhuwan Sarine analyses the Court’s finding on the burden of proof in patent matters concerning revocation petitions. Bhuwan is a third year B.A., LL.B. (Hons.) student at National Law School of India University, Bengaluru. He is interested in Intellectual Property Laws and the dynamic intersection of law and technology, and seeks to pursue a career in academia and research.
Embio Ltd. v. Malladi Drugs: Madras High Court Clarifies the Extent of Burden of Proof in Matters concerning Patent Revocation
By Bhuwan Sarine
On 4 October, 2024, a Single Judge Bench of the Madras HC issued an order rejecting a revocation petition filed by Embio Ltd. (“Petitioner”) under s. 64 of the Patents Act, 1970 (“the Act”). While the Court’s analysis touched upon multiple aspects of patentability and revocation, including ‘novelty,’ ‘inventive step,’ ‘non-obviousness’ and ‘person interested,’ the most significant point was related to the burden of proof in matters concerning patent revocation petitions. It was held that the burden to prove the grounds of revocation lies on the party making the allegation, and in the absence of strong evidence in that regard, the burden is not discharged. Accordingly, the Court decided in favour of Malladi Drugs (“Respondent”), upholding the validity of its patent.
In this post, I will firstly analyse the main parts of the order, using the arguments of the parties and secondly, expand on the burden of proof in patent revocation dispute and what has been the overall trend with respect to the same. Finally, I will conclude with the order’s contribution to patent jurisprudence.
The Arguments from Both Sides
The Respondent’s patent was a method for the preparation of new chiral beta-amino alcohols from R(-)-phenyl acetyl carbinol (para 11). The Petitioner filed this revocation petition on the grounds of lack of novelty and inventive step. They argued that since the method was found in prior arts, the impugned invention was not novel. On lack of inventive step, they alleged that the use of phenyl acetyl carbinol as the starting compound for synthesis of amino alcohol was present in prior arts and it was obvious to any person skilled in the art to arrive at the final compound. Further, the invention also did not have any technical advancement or economic significance. Thus, all three elements of ‘inventive step’ under s. 2(1)(ja) of the Act were alleged to be absent here.
The Respondent, on the other hand, argued that the Petitioner was not ‘a person interested’ in the first place, as required under s. 64(1) of the Act. It was further argued that the process was novel since it was for intermediates of new API’s, and it was inventive since there was high optical purity achieved (para 18). The Petitioner’s claim was based on irrelevant prior arts.
What Did the Court Say?
The Court began by taking note of the relevant cases on the issues involved (para 19). Firstly, it noted that the Respondent fell within the definition of ‘person interested’ under s. 2(1)(t) of the Act. While the wording of the definition does not include competitors or manufacturers, the Court gave an expansive interpretation to it by placing reliance on Dr. Aloys Wobben and Anr. v. Yogesh Mehra and Ors. and M/S La Renon Health Care v. Union of India. In the former, the SC held that ‘person interested’ would include a person who has a direct, present and tangible interest with a patent and the grant of the patent would adversely affect his rights. Further, the term is not static and a person would assume that character even after the grant of the patent. In the latter, the Madras HC noted that the definition is inclusive, and not exhaustive. Reading both the cases together, the ambit of s. 2(1)(t) gets considerably widened. Since the Petitioner was a competitor, the Court concluded that it was a ‘person interested’ (para 30).
Secondly, the Court addressed the objections based on lack of ‘novelty’ and ‘inventive step.’ On novelty, it noted that the impugned method lessened the reaction time and produced better results as compared to the cited prior arts (para 37). Further, the method exhibited technical advance with drastically higher yield (close to 60% – 70%) and superior optical purity (close to 100%) over prior arts. On non-obviousness, the Court did not go into the usual probability analysis, i.e., who would have been a person skilled in the art in this case and whether he would have been able to arrive at the impugned method using the cited prior arts. It decided the issue on the basis of actual development, i.e., despite the prior arts being in existence, no one had been able to come up with the Respondent’s method in all those years (para 41). This was held to be conclusive of non-obviousness. Thus, the constituents of ‘inventive step’ were satisfied.
What perhaps prompted the Court from not undertaking a probability analysis was the fact of the prior arts being too old. Relying on the Delhi HC decision in Societe Des Produits Nestle v. Controller of Patents, it observed that the differences between the prior arts and the invention were not obvious to try because no one had actually attempted the latter, in spite of the prior arts being considerably old. In Societe’s case, it was noted that in such cases, even a minor development is sufficient. The question arising is whether the Court would have gone into probability analysis, had the prior arts been of a recent origin. While there is not much jurisprudence on the effect of age of prior arts on non-obviousness, it definitely changed the test used in this case.
It is also worth noting that the Court appeared to conflate ‘novelty’ and ‘inventive step’ at para 37. While deciding on novelty, it mentioned lower reaction time and better results produced by the patented method. However, these are ‘technical advances’ over prior arts (an element of ‘inventive step’) and do not exhibit ‘novelty’ as per its definition. Novelty, under s. 2(1)(l) of the Act, is assessed differently, on the basis of whether the subject matter of the invention has fallen into public domain before the date of filing of application. Going ahead, the Court noted (at para 38) that the method provided a new synthetic route for the synthesis of optically pure hydrochlorides, and novelty was exhibited by the isolation of amino alcohol as HCl salt. While this was not anticipated by the cited prior arts, the Court would have done better to decide on ‘novelty’ in a more nuanced and concrete manner, distinguishing it from ‘inventive step.’
On Burden of Proof in a Matter Concerning Revocation Petition
The Court observed that the Petitioner did not put forward any strong materials to establish his claims of lack of ‘novelty’ and ‘inventive step’ and invalidate the patent (para 43). The right under s. 64 of the Act is not automatic, but is contingent upon the burden of proof being discharged. In cases of post-grant challenge under s. 64 of the Act, Courts have repeatedly held that the burden is on the Petitioner to establish the grounds of revocation citing adequate evidence.
In F. Hoffmann-La Roche Ltd. & Anr. v. Cipla Ltd., a Division Bench of the Delhi HC held that obviousness is a question of law based on facts and the burden to prove the claims is on the party alleging. Only after the party alleging makes out its case, the burden of proof shifts on the inventor. In Embio Ltd. v. Malladi Drugs, the initial burden was not discharged by the Petitioner. Recently, in Galatea Ltd. v. and Ors. v. Diyora and Bhanderi Corporation, the Gujarat HC dismissed a revocation petition since the cited materials were not sufficient to establish the grounds claimed. From a reading of these two cases, the point coming across is that materials have to be adduced as well as sufficient/relevant to discharge the burden. In Embio’s case, it failed on the latter count since the cited prior arts were not sufficient to prove the lack of ‘novelty’ and ‘inventive step.’
The overall trend of Courts while dealing with revocation petitions has been to ask the Petitioners to establish their grounds under s. 64 with adequate evidence. This stands true at least for the past two decades, emanating from Hoffmann, Gelatea, Embio and other cases. Where the grounds are established by producing relevant materials and literature, the burden is discharged and Courts are content to revoke the patent. Ollos Biotech Pvt. Ltd. v. Omega Ecotech Products Ltd., decided by the Madras HC earlier this year, is a case in point.
Embio’s Contribution to Patent Jurisprudence
A closer look at the wording of s. 64 of the Act would show that sub-section (1) uses the term ‘may’ and not ‘shall,’ thereby giving Courts discretion in cases of patent revocation. It is then correct to ask the Petitioners to satisfy the courts by producing sufficient evidence. While the point on burden of proof has been laid down on a number of occasions by different courts, the Madras HC has done well to reiterate it and clarify the extent of proof required for such petitions to succeed. In the past, there have been occasional lapses wherein patents have been revoked without asking for adequate evidence. Prashant Reddy critiques one such decision by the IPAB in his post. This timely order by the Madras HC sets the correct standard, aligning with the precedents on the issue.