Introduction
When the Supreme Court of India dismissed Novartis AG’s special leave petition challenging the rejection of its patent application for the beta-crystalline form of imatinib mesylate in April 2013, it delivered what many observers described as a landmark victory for access to medicines. The decision in Novartis AG v. Union of India affirmed the constitutional validity and proper application of Section 3(d) of the Patents Act 1970, a provision that the pharmaceutical industry has consistently challenged as inconsistent with India’s TRIPS obligations and that public health advocates have consistently defended as a legitimate exercise of the flexibilities available to developing countries under international trade law.
More than a decade after Novartis, Section 3(d) remains the most debated provision in Indian patent law and one of the most influential in global pharmaceutical patent policy. Its operation has been tested repeatedly before the Patent Office, the Intellectual Property Appellate Board (now partially reconstituted after the IPAB’s abolition), and the High Courts as successive waves of pharmaceutical companies have attempted to secure Indian patents for new formulations, new polymorphs, new salts, new esters, and new dosage forms of existing medicines. The outcomes of these contests, and the interpretive standards that have emerged from them, are the subject of this article.
Legal Framework
Section 3(d): Text and Purpose
Section 3(d) of the Patents Act 1970, introduced by the Patents (Amendment) Act 2005 in response to India’s TRIPS obligations and the policy objective of preserving access to affordable medicines, provides that the following shall not be treated as inventions for the purpose of the Act: “the mere discovery of a new form of a known substance which does not result in the enhancement of the known efficacy of that substance or the mere discovery of any new property or new use for a known substance or of the mere use of a known process, machine or apparatus unless such known process results in a new product or employs at least one new reactant.”
The Explanation to Section 3(d) specifies that “salts, esters, ethers, polymorphs, metabolites, pure form, particle size, isomers, mixtures of isomers, complexes, combinations and other derivatives of known substance shall be considered to be the same substance, unless they differ significantly in properties with regard to efficacy.” The provision thus creates two distinct bars for pharmaceutical patent applications on derivative forms of known substances: the new form must differ significantly in properties with regard to efficacy, and that difference in efficacy must represent enhanced efficacy relative to the known substance.
The purpose of this provision, as articulated by the Supreme Court in Novartis, is to prevent “ever-greening,” the practice by which pharmaceutical companies obtain successive patents on minor modifications of existing drugs to extend the effective period of market exclusivity beyond the original patent term, preventing generic competition from entering the market. The Court held that Section 3(d) is an instrument of checking “the mischief of ever-greening,” reflecting a deliberate policy choice by the Indian legislature to set a higher threshold for pharmaceutical patent protection than the basic TRIPS requirement of novelty and inventive step.
The Enhanced Efficacy Standard
The Supreme Court’s interpretation of “enhanced efficacy” in Novartis was restrictive: efficacy for this purpose means “therapeutic efficacy,” not other beneficial properties such as improved bioavailability, improved solubility, improved stability, or reduced side effects, unless those physical or chemical properties translate directly into enhanced therapeutic efficacy in clinical terms. The beta-crystalline form of imatinib mesylate was rejected because, while Novartis claimed improved flowability and better thermodynamic stability, no evidence was presented that these properties enhanced the therapeutic efficacy of imatinib in treating chronic myeloid leukaemia.
This interpretation has been criticised by the pharmaceutical industry on the ground that it ignores pharmacokinetic improvements that have real clinical significance. Improved bioavailability, for example, means that a smaller dose of the drug can achieve the same therapeutic effect, which reduces side effects, improves patient compliance, and may reduce cost. The Court’s narrow focus on “therapeutic efficacy” in the sense of the drug’s effect on the target disease, without accounting for these downstream improvements, is said to discourage investment in pharmaceutical formulation innovation.
Section 84: Compulsory Licensing
Section 84 of the Patents Act 1970 permits any person to apply to the Controller for a compulsory licence to work a patent, on grounds including that the reasonable requirements of the public with respect to the patented invention have not been satisfied; that the patented invention is not available to the public at a reasonably affordable price; or that the patented invention is not being worked in India on a commercial scale. The Natco Pharma v. Bayer AG decision of 2012, which granted the first compulsory licence in India’s patent history for Sorafenib Tosylate (a cancer drug sold by Bayer as Nexavar), established the standards for compulsory licensing under Section 84 and confirmed India’s willingness to use this TRIPS-permitted flexibility when access concerns are acute.
The Natco decision also established the royalty rate framework: the Controller awarded a royalty of 6% of net sales, consistent with the guidelines in the CGPDTM’s Manual of Patent Office Practice and Procedure. Bayer’s challenge to the compulsory licence before the Intellectual Property Appellate Board and subsequently before the Bombay High Court was unsuccessful; the High Court confirmed in 2014 that the compulsory licence was lawfully granted and that the royalty rate was appropriate.
Judicial Developments
Post-Novartis Applications of Section 3(d): 2019-2024
In the decade following Novartis, the Patent Office and appellate bodies have applied Section 3(d) in numerous cases involving cancer drugs, antiretrovirals, and, after 2020, COVID-19 treatments. The emerging pattern in these decisions is instructive.
Applications for new polymorphs of cancer drugs have generally been rejected under Section 3(d) where the applicant relies on improved physicochemical properties without clinical efficacy data. The Delhi HC’s decisions in cases involving patents on polymorph forms of Lenalidomide (a multiple myeloma drug) confirmed that improved crystalline form stability is insufficient to establish enhanced therapeutic efficacy unless clinical or pharmacokinetic data demonstrates a meaningful improvement in patient outcomes.
In the antiretroviral context, applications for new formulations of HIV drugs have faced similar scrutiny. The Chennai Patent Office rejected several applications in 2021-2022 for new salt forms of antiretrovirals used in first-line HIV treatment, applying the Novartis standard strictly and requiring that applicants demonstrate through comparative clinical data that the new form delivers measurably better therapeutic outcomes than the existing form.
The COVID-19 treatment context introduced new urgency to Section 3(d) disputes. Patent applications filed during 2020-2022 for new formulations of Remdesivir, Molnupiravir, and Nirmatrelvir (the Paxlovid active ingredient) were examined against Section 3(d) in an environment of heightened public health concern. The CGPDTM, sensitive to the access implications of pharmaceutical patents in a pandemic context, applied Section 3(d) rigorously in these examinations, consistent with its practice for other pharmaceutical patents.
The IPAB’s Abolition and Its Aftermath
The Tribunals Reforms Act 2021 abolished the Intellectual Property Appellate Board, which had been the primary forum for appeals from Patent Office decisions. Patent appeals are now heard by the High Courts. This institutional change has had complex effects on pharmaceutical patent litigation. On one hand, High Court proceedings are generally more rigorous and more publicly visible than IPAB proceedings were. On the other hand, the High Courts’ capacity to hear specialist IP appeals has been strained, particularly in Chennai, where the Madras High Court has seen a significant increase in patent appeals from the Chennai Patent Office.
The Delhi High Court’s Intellectual Property Division, established in 2021 with dedicated benches for IP matters, has developed considerable expertise in pharmaceutical patent cases and has become the preferred forum for complex disputes involving Section 3(d). The Court’s 2023 and 2024 decisions on pharmaceutical patents have generally been consistent with the Novartis standard, applying the therapeutic efficacy test strictly and requiring quantitative evidence of enhancement rather than accepting qualitative assertions.
Contemporary Issues and Analysis
The Tension with R&D Investment
The pharmaceutical industry’s central argument against Section 3(d) is that it discourages investment in incremental pharmaceutical innovation, including improvements in formulation technology that have real clinical value. The industry argues that the Novartis standard applies so stringently that even genuine improvements in drug delivery, dosing convenience, and patient safety are excluded from patent protection, reducing the incentive to invest in this kind of development work.
This argument deserves serious analysis. The pharmaceutical innovation ecosystem involves not only the discovery of novel active pharmaceutical ingredients but also the extensive development work required to bring those ingredients to patients in safe, stable, bioavailable, and manufacturable forms. Formulation science and pharmaceutical technology are genuine sciences with substantial investments; the argument that Section 3(d) provides no incentive for this investment is not without foundation.
However, the counter-argument is equally powerful. The patent term for the original active ingredient already provides the incentive for the initial discovery investment. If the new form provides only marginal clinical improvement, the primary motivation for seeking a new patent is market exclusivity extension rather than genuine innovation incentive. The policy question is how to distinguish genuine formulation innovation from strategic evergreening, and Section 3(d) is an imperfect instrument for making this distinction precisely because the required clinical comparisons are expensive and technically complex.
The Doha Declaration and India’s Global Role
India’s role as the “pharmacy of the world” provides context for understanding Section 3(d) as a policy instrument. India supplies approximately 20% of global generic medicines by volume, including the bulk of antiretrovirals used in HIV treatment programs in sub-Saharan Africa. India’s capacity to supply affordable generics is directly dependent on its ability to resist evergreening patents that would delay or prevent generic entry.
The Doha Declaration on TRIPS and Public Health (2001) affirmed the right of developing countries to use TRIPS flexibilities, including compulsory licensing and restrictive patentability criteria, to protect public health. India’s Section 3(d) is the most prominent example of a developing country exercising these flexibilities through a statutory patent eligibility criterion rather than through post-grant mechanisms such as compulsory licensing.
Comparative and International Perspective
Brazil’s National Health Surveillance Agency (ANVISA) operated a pharmaceutical patent prior consent mechanism from 1999 until 2017, under which the health ministry could block patents on pharmaceutical products that it determined would create barriers to access to medicines. This prior consent mechanism served a similar function to Section 3(d) but was more administratively intensive and less legally precise. Brazil’s Federal Supreme Court struck down ANVISA’s prior consent powers in 2017, and the Brazilian National Industrial Property Institute (INPI) subsequently revised its pharmaceutical patent examination guidelines to incorporate some Section 3(d)-inspired restrictions within TRIPS limits.
The similarity between Brazil’s approach and India’s suggests that Section 3(d) represents a broader developing-country strategy of using TRIPS flexibilities to resist pharmaceutical patent evergreening, rather than an idiosyncratic Indian innovation. The US Trade Representative has listed both India and Brazil on its Priority Watch List in the Special 301 Report in part because of these provisions, reflecting the ongoing tension between pharmaceutical industry interests and developing-country access to medicines policies.
Practical and Policy Implications
For pharmaceutical patent applicants, the practical implication of the post-Novartis jurisprudence is clear: applications for new forms of known substances require robust clinical or pharmacokinetic data demonstrating enhanced therapeutic efficacy, not merely improved physicochemical properties. Applications supported only by in vitro data or comparative dissolution studies are unlikely to survive Section 3(d) scrutiny before a well-prepared examination. Applicants should commission clinical or pharmacokinetic comparative studies before filing and should structure patent claims to emphasise the therapeutic outcome rather than the physicochemical property.
For generic manufacturers, Section 3(d) and the compulsory licensing framework together constitute a powerful toolkit for resisting evergreening, but their effectiveness depends on active engagement with the patent examination process through pre-grant oppositions (Section 25(1)) and post-grant oppositions (Section 25(2)). Civil society organisations such as the Lawyers Collective and the Initiative for Medicines Access and Knowledge (I-MAK) have demonstrated through successful opposition proceedings that organised opposition is an effective mechanism for preventing evergreening patents.
Suggestions and Reforms
The CGPDTM should issue comprehensive examination guidelines specifically addressing the application of Section 3(d) to pharmaceutical patents, incorporating the Novartis standard and the post-Novartis case law into a clear and consistent examination framework. The current guidelines are insufficiently specific about the type and quantum of evidence required to satisfy the enhanced efficacy standard, leading to inconsistent decisions across different patent offices.
The government should consider introducing a presumption-shifting mechanism: when a pharmaceutical patent application claims a new form of a known substance, the applicant should bear the burden of demonstrating enhanced therapeutic efficacy through clinical data, and the absence of such data should create a presumption of non-eligibility under Section 3(d). This burden-shifting rule would codify the Novartis standard in procedural terms and would reduce the litigation resources required to resist evergreening patents.
The government should invest in the institutional capacity of the Patent Office to evaluate complex pharmaceutical patent applications, including through the recruitment of specialists in pharmacokinetics, clinical pharmacology, and formulation science. The current examination process relies too heavily on generalist examiners who may lack the technical capacity to evaluate the clinical data submitted in support of Section 3(d) claims, leading to inconsistent outcomes.
Conclusion
Section 3(d) of the Patents Act 1970 remains, more than a decade after Novartis, one of the most important and contested provisions in India’s intellectual property landscape. Its application in contemporary pharmaceutical patent disputes reflects both the vitality of the Supreme Court’s 2013 decision and the continuing tension between pharmaceutical industry interests in patent protection and developing-country interests in access to affordable medicines.
The provision has not been static: the post-Novartis case law has elaborated the therapeutic efficacy standard, the abolition of the IPAB has changed the institutional landscape, and the COVID-19 pandemic has added new urgency to access concerns. The reforms proposed in this article, focusing on examination guidelines, burden of proof, and examiner capacity, would strengthen the consistent and effective application of Section 3(d) without departing from the policy objectives that the Supreme Court affirmed in Novartis. India’s pharmaceutical patent framework, with Section 3(d) at its centre, represents a distinctive and consequential contribution to the global debate on how to reconcile innovation incentives with access to essential medicines.
