We had discussed in our earlier post how the Calcutta High Court, in R J Reynolds Tobacco Company vs Controller General of Patents [IPDPTA/31/2023], noted that “Section 3(b) focuses on the primary or intended use or commercial exploitation of an invention. The underlying interest being ethical considerations”. In a similar vein, the Calcutta High Court has now opined that “Section 3(b) is the intent principle and not the effect or harm principle”. This position was discussed by the Court in ITC Limited vs Controller of Patents [IPDPTA No. 121 of 2023]

In this case, the Appellant challenged the refusal of patent application number 685/KOL/2015, entitled “A Device and method for generating and delivery of a Nicotine Aerosol to a user” which pertains to a nicotine delivery mechanism falling within the category of Nicotine Replacement Therapy (NRT). The application was refused on the ground of non-patentability under Section 3(b) of the Patents Act, 1970. The Controller relied on materials such as the Indian Council of Medical Research (ICMR) White Paper on Electronic Nicotine Delivery Systems (ENDS) to conclude that the claimed invention is an e-cigarette and is, therefore, injurious to public health. The Controller also clarified in the impugned order that ENDS are not yet approved as NRTs under the Drugs and Cosmetics Act.

The Court, however, found that the principles of natural justice were violated in passing of the impugned order. The Court noted that the hearing notice did not characterize the invention as an e-cigarette or ENDS, nor did it put the Appellant on notice of the Controller’s intention to rely on the documents and statues that ultimately formed the basis of the refusal. As a result, the Appellant was deprived of a fair opportunity to contest the characterization of the invention and to address the grounds ultimately cited in the refusal.

In the impugned order, the Controller relied on a host of documents, including various government advisories, and statutory frameworks such as the Drugs and Cosmetics Act, the Environment Protection Act, and the Prohibition of Electronic Cigarettes Act, 2019, which were neither cited in the First Examination Report (FER) nor mentioned in the hearing notice. The only document cited in the hearing notice was the ICMR white paper on ENDS. In an attempt to justify the omission, the Controller contended that these materials were available in the public domain, implying that the Appellant ought to have been aware of them regardless of whether they were specifically served to the Appellant. The Court categorically rejected this argument, holding that the availability of documents in the public domain does not discharge the Patent Office of its duty to furnish all materials it intends to rely on in examining a patent application. Citing the Supreme Court’s decision in Ssangyong Engineering and Construction Co. Ltd. vs NHAI, the Court reaffirmed that when a decision-making authority relies on material not disclosed during the proceedings, it deprives the affected party of the opportunity to deal with that material, thereby violating the principles of natural justice.  

Moreover, the Court highlighted the Appellant’s assertion that the invention was a chemically activated, non-electronic nicotine aerosol device. The Appellant asserted that the invention did not use heat, electricity, or electronics and was activated through a chemical reaction between nicotine and pyruvic acid, thereby placing it outside the statutory definition of an e-cigarette. However, the Court noted that the Controller had concluded that the invention was an e-cigarette without providing the Appellant an opportunity to present its arguments regarding this characterization. The Court did not go into the merits of the case; however, noted that the claimed invention “relates to a chemical evaluation of electronic cigarettes”.

Noting that the Controller applied the “serious prejudice” portion of Section 3(b) in refusing the subject application, the Court held that Section 3(b) operates on the “intent principle” rather than the “effect or harm principle”.

The Court further took note of the Appellant’s reliance on guidance materials published by the Indian Patent Office itself. Specifically, reference was made to a PowerPoint presentation by Shri D.P.S. Parmar, then Deputy Controller of Patents, hosted on the World Intellectual Property Organization (WIPO) website. The presentation illustrated examples of inventions that could fall within the scope of Section 3(b). Notably, none of the illustrations included inventions related to tobacco, nicotine, or smoking devices. The Appellant implied that this omission was indicative of the Patent Office’s own understanding that nicotine-based inventions, per se, were not to be excluded under Section 3(b), unless their intended use directly implicated public order or morality. The Court concurred, observing that none of the examples cited in the presentation, nor those provided in the Indian Patents Manual, listed tobacco- or nicotine-based inventions as per se non-patentable under Section 3(b).

In addressing the broader implications of denying a patent merely because the product’s commercial use might be restricted, the Court emphasized India’s obligations under international law. Article 27.2 of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) permits members to exclude inventions from patentability only where preventing their commercial exploitation is necessary to protect public order or morality, provided such exclusion is not made merely because the exploitation is prohibited by law. Similarly, the Court mentioned Article 4quater of the Paris Convention, which prohibits the refusal of a patent on the ground that the sale of the patented product is subject to restrictions. The Court held that the mere fact that an invention’s commercialization is restricted or limited in a country does not, by itself, render it non-patentable.

The Court also referred to Section 83(d) and (e) of the Patents Act, implying that while patents must operate in a manner that advances public health and broader socio-economic interests, these provisions make clear that the grant of a patent does not override the government’s authority to regulate the manufacture, use, or sale of patented inventions to protect public health.

Therefore, it can be said that the grant of a patent does not confer an automatic right to commercialize the invention, especially where such commercialization is subject to independent regulatory approval. In effect, the patent system distinguishes between the right to exclude others (conferred by a patent) and the right to commercially exploit the invention, which remains subject to separate regulatory frameworks.

Ultimately, the Court set aside the impugned order and remanded the matter to the Patent Office for fresh consideration by a different officer, with explicit directions that the matter be examined independently, uninfluenced by the above findings.