Wall Street Journal - August 7, 2007
Jeanne Whalen, jeanne.whalen@wsj.com

An Indian court rejected Novartis AG's attempt to change Indian law to make it easier to patent drugs, a case that underscores the growing tension between public-health interests and intellectual-property rights.

Novartis said the ruling would discourage development of medicines in India and abroad. Public-health activists applauded the court's decision, saying it would help protect India's ability to make inexpensive generics for the developing world. Charitable groups and developing nations rely on India to supply cheaper versions of the latest treatments for HIV and other diseases.

Novartis, based in Basel, Switzerland, filed its case after India rejected the company's patent application for the cancer drug Gleevec in January 2006. Novartis filed a lawsuit in court in Chennai, arguing that the laws underpinning India's decision violated World Trade Organization rules and should be removed. India joined the WTO in 1995.

The court ruled yesterday that it wasn't the proper forum for deciding whether the laws were compliant with WTO rules. The court said the WTO should decide such matters. A Novartis spokeswoman said she didn't know whether the issue would be discussed at the WTO. Only governments -- not companies -- are allowed to raise disputes at the WTO.

Until 2005, Indian law allowed domestic companies to sell copies of drugs that were patented in the West as long as they changed how they made the drugs. Then, in early 2005, India adopted a new patent law to fulfill its obligations as a member of the WTO. The law lets drug companies seek patents on medicines invented after 1995, or for new and more efficacious versions of older drugs. When India rejected Novartis's Gleevec patent filing, it argued that the version Novartis wanted to patent wasn't that different from a version patented in 1993.

In a statement yesterday, Novartis said it disagreed with the court's ruling but wasn't likely to appeal it. The company said it was awaiting the full text of the decision.

Novartis said the court case had advanced debate about India's patent laws. "Now local and international leaders in both industry and academia recognize the inadequacies of [Indian law] and are raising serious concerns about the deficiencies of the Indian patent system," Ranjit Shahani, vice chairman and managing director of Novartis in India, said in the statement.

Groups like Doctors Without Borders and Oxfam International had sharply criticized Novartis for filing the suit, leading to months of bad publicity for Novartis. They argued that if Novartis were successful in changing Indian law, drug companies would be able to patent meaningless changes to drugs. "This ruling is a lifeline for the millions of people who cannot afford brand-name drugs, and ensures that essential medicines from India will reach those who rely on them," Sandhya Venkateswaran, head of advocacy for the aid agency CARE International in India, said in a statement issued jointly with Oxfam and other groups.

Novartis said it is still appealing the actual rejection of the Gleevec patent, an appeal that will be decided separately by India's Intellectual Property Appellate Board.

--Peter Wonacott contributed to this article.

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