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Written by Keerthana M, Advocate

ITC LIMITED VS THE CONTROLLER OF PATENTS DESIGNS AND TRADEMARK, IPDPTA/13/2024.

The intersection of patent law and morality has long been a subject of controversy across jurisdictions worldwide. In India, this debate often centers on Section 3(b) of the Patents Act, 1970, which serves as a key provision in addressing such concerns.

Recently, the Calcutta High Court set aside a patent rejection order issued by the Controller of Patents (‘Respondent’), citing a misinterpretation of Section 3(b) of the Patents Act, 1970, an erroneous assessment of the subject invention, and violations of the principles of natural justice.

The invention, titled ‘A Heater Assembly to Generate Aerosol,‘ was developed to provide a uniform heat distribution system for generating aerosol intended for user inhalation.

ITC Limited (‘Appellant’) contended that it had satisfied the Controller with respect to the inventive step and had successfully distinguished its invention from prior art. It was further argued that the non-speaking order relied on new documents, copies of which were not furnished to the Appellant. The Controller’s conclusion that the invention contravenes ‘public order and morality’ was described as cryptic and unreasoned. The Appellant also challenged the erroneous reliance on Article 47 of the Constitution and the misinterpretation of Section 83(e)(a) of the Patents Act.

The Respondent submitted that the impugned order was adequately reasoned and aligned with the provisions of the Prohibition of Electronic Cigarettes (Production, Manufacture, Import, Export, Transport, Sale, Distribution, Storage, and Advertisement) Act, 2019.

The Court held that the Controller had erroneously interpreted the invention, presuming it was exclusively intended for use with substrates containing active tobacco compounds, which are harmful to human health and life. In reality, while the invention may operate on substrates that contain or do not contain tobacco compounds, it is not limited to any specific type of substrate.

The Court relied on the interpretation of ‘public order’ under Section 3(b) of the Patents Act in light of the expression ordre public as used in the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). It also referred to Article 4quater of the Paris Convention, which provides that the restriction of a patented product’s sale on grounds of public safety or environmental regulations cannot, by itself, justify the refusal or invalidation of a patent.

The Court held that the Controller had failed to justify his conclusions in the impugned order, offering no explanation as to how the invention could cause serious prejudice to human life or why it falls under the prohibition of Section 3(b) of the Act. The intent behind the appellant’s invention was disregarded, and the effect-or-harm principle was mistakenly applied in reaching this conclusion.

The Court rejected the respondent’s argument that the patent rejection was in accordance with the Prohibition of Electronic Cigarettes Act, 2019, noting that this contention was not raised in the pleadings or the impugned order. Moreover, the Act regulates the sale, manufacture, import, and export of electronic cigarettes, but it does not govern the grant or denial of patents.

The Court also found that the impugned order incorrectly assumed that the grant of a patent confers the right to commercialize the product. In reality, patents grant only an exclusionary right, allowing the patent holder to prevent third parties from manufacturing the invention (Hindustan Lever Limited v. Lalit Wadhwa & Anr., 2007 SCC OnLine Del 1077).

The Court cited R. J. Reynolds Tobacco Company v. The Controller of Patents, Designs, and Trademarks, an unreported decision in IPDPTA 31 of 2023, where Section 12.1(i) of the 161st Report of the Parliamentary Standing Committee on Commerce was referenced. The report noted that Section 3(b) of the Indian Patents Act, 1970, is broadly worded and lacks clear guidelines or safeguards, and that, as a result, patents have been denied for socially beneficial inventions, such as nicotine chewing gums used for smoking de-addiction, and smoking devices intended to make the process less hazardous. As a solution, the Committee proposed that patents should only be denied for inventions that are explicitly prohibited by law. Additionally, it recommended amending Section 3(b) to incorporate a safeguard mechanism.

The Court, citing Man Truck Bus SE v. Assistant Controller of Patents & Designs, 2024 SCC OnLine Del 874, found that the appellant was not given an opportunity to address the additional documents referenced in the impugned order, thereby violating the principles of natural justice. The Court further held that the preconceived notion that all tobacco products cause serious prejudice to human life and health, without reliance on scientific evidence, is unsustainable.

The Court acknowledged that the interaction between patent law and ethics has often resulted in an uneasy relationship. It emphasized that Section 3(b) should not be interpreted to encompass all subjective concerns related to morality, public order, or health in the absence of scientific evidence.

The Court held that reliance on Article 47 of the Constitution and fundamental rights was misplaced in the context of assessing the patentability of an invention. It clarified that constitutional directives concerning public health cannot, by themselves, determine the validity or invalidity of a patent application. Furthermore, the Court observed that Section 83(e)(a) of the Patents Act had been misinterpreted, as it was erroneously presumed that the grant of a patent necessarily implies the commercialization of the invention. In reality, a patent merely confers a negative right to exclude others from using the invention and does not, in itself, authorize or mandate its commercial exploitation.

Ultimately, the Court concluded that the impugned order was legally unsustainable and set it aside. The Controller was directed to reconsider the matter afresh, in accordance with the law.

COMMENTS

The debate over what constitutes morality and public order is inherently subjective, and the arbitrary application of these principles in patent examinations can hinder the development of socially beneficial innovations.

This decision underscores the importance of a reasoned and consistent interpretation of legal provisions and the subject invention during the patent examination process. The Court reiterated that if an invention is to be deemed immoral or against public order, such conclusions must be backed by clear and cogent reasoning, reinforcing the principles of natural justice.