Supreme Court settles the effect of repeal on Exclusive Marketing Rights under the Patents Act: Glaxo Smith Kline PLC vs. Controller of Patents & Designs (2008)

Introduction

Date of the Judgment: September 10, 2008

Citation: N/A (Case reference: Civil Appeal No. 5588 of 2008, arising out of SLP (C) No.21010 of 2006)

Judges: Dr. Arijit Pasayat, J. and Lokeshwar Singh Panta, J.

When a law is repealed, what happens to the rights that were in the process of being decided under the old law? The Supreme Court addressed this question in a case regarding Exclusive Marketing Rights (EMR) for patents. The core issue was whether repealing the provisions for EMR under the Patents Act would affect pending applications and any rights that had already been claimed. The judgment was delivered by a two-judge bench comprising Dr. Arijit Pasayat and Lokeshwar Singh Panta, JJ.

Case Background

Glaxo Smith Kline PLC and others (hereinafter referred to as “the Appellants”) initially filed an application on August 28, 1998, under Section 5(2) of the Patents Act, 1970, seeking a patent. Subsequently, on June 30, 2000, they applied for an “Exclusive Marketing Right” (EMR).

On July 28, 2000, the examiner submitted a report concerning the EMR claim. However, on May 3, 2002, the Controller of Patents rejected the EMR application. Dissatisfied, the Appellants filed two writ applications before the Calcutta High Court, being W.P.No. 20469(W) of 2004 and W.P.No. 20407(W) of 2004. A Single Judge of the High Court set aside the Controller’s order of May 3, 2002, directing the Joint Controller of Patents to reconsider the EMR application, keeping all points open.

Following the High Court’s order on December 16, 2004, the Controller of Patents again rejected the EMR application on December 28, 2004.

On January 1, 2005, the Patents (Amendment) Act, 2005, came into effect. This amendment included the deletion of Chapter IV-A, which previously governed the adjudication of EMR claims.

On June 9, 2005, the Appellants filed another writ application challenging the December 28, 2004, order, which had rejected their EMR request for the second time.

Timeline

Course of Proceedings

The Controller of Patent and the Union of India filed two appeals challenging the Single Judge’s order. Two additional appeals were filed by a third party seeking to be added as a respondent. The appellants (before the High Court) raised a preliminary objection regarding the maintainability of the writ petition, citing the amendments to the Patents Act effective from January 1, 2005.

They argued that with the deletion of Chapter IVA and Section 78 of the Amending Act, there was no basis for further considering EMR applications. They contended that pending EMR applications should be treated as patent claims under Section 5(2) of the Principal Act and processed as requests for examination under Section 11(B)(3) of the Act. Essentially, they asserted that no pending cases for EMR grants could be considered after January 1, 2005, and previously disposed of EMR applications could not be revived.

The Appellants (Glaxo Smith Kline PLC) argued that there was no pending EMR application on January 1, 2005, making Section 78 of the Amending Act inapplicable. They claimed a vested right to challenge the order, as the EMR request was disposed of before the amendment came into effect.

The High Court accepted the preliminary objection, leading to the appeals being allowed. The merits concerning the third parties were not addressed.

Legal Framework

The Supreme Court considered the following legal provisions:

• Section 6 of the General Clauses Act, 1897: This section deals with the effect of repeal of an enactment. It ensures that unless a different intention appears, the repeal does not:
  • Revive anything not in force or existing at the time the repeal takes effect.
  • Affect the previous operation of the repealed enactment or anything duly done or suffered under it.
  • Affect any right, privilege, obligation, or liability acquired, accrued, or incurred under the repealed enactment.
  • Affect any penalty, forfeiture, or punishment incurred for offences committed against the repealed enactment.
  • Affect any investigation, legal proceedings, or remedy related to such right, privilege, obligation, liability, penalty, forfeiture, or punishment.

  The section allows for the continuation of investigations, legal proceedings, or remedies, and the imposition of penalties, forfeitures, or punishments as if the repealing Act had not been passed.

• Section 24B(1) of the Patents Act: This section pertains to the grant of exclusive rights. It states that if a claim for a patent covered under sub-section 2 of Section 5 has been made, and the applicant has met certain conditions, they shall have the exclusive right to sell or distribute the article or substance in India. The conditions include:
  • Filing an application for the same invention in a convention country on or after January 1, 1995, and obtaining a patent and approval to sell or distribute the article based on appropriate tests.
  • Making a claim for a patent in India on or after January 1, 1995, for a method or process of manufacture for the invention, and obtaining a patent and approval to sell or distribute the article from the designated authority.

  The exclusive right lasts for five years from the date of approval granted by the Controller, until the date of grant of the patent, or the date of rejection of the application for the grant of patent, whichever is earlier.

Arguments

Arguments by the Appellants (Glaxo Smith Kline PLC):

• The Appellants argued that they had a crystallized right because of Sections 24A and 24B of the Patents Act.
• They contended that the original orders dated May 3, 2002, and December 16, 2004, were under challenge. The order dated December 28, 2004, was passed on remand, and the Single Judge set aside the order on February 10, 2006.
• Reference was made to Section 24B(1) regarding the right having accrued.

Arguments by the Respondents (Controller of Patents & Designs):

• The Respondents submitted that the intention of the statute appears to be contrary to the Appellants’ claims.
• They argued that the transitional provision clearly applies, even if it is treated as pending under Section 11B(3) of the Patents Act.

Submissions Table

Issues Framed by the Supreme Court

The judgment does not explicitly list “Issues Framed by the Supreme Court.” However, the core issue can be summarized as:

1. Whether Section 78 of the Amendment Act applies to proceedings concluded before the appointed day.
2. What is the effect of the repeal of Chapter IV-A of the Patents Act, particularly concerning rights and applications pending or concluded before the repeal.

Treatment of the Issue by the Court

Authorities

The Supreme Court relied on the following authorities:

• M/s Hoosain Kasam Dada (India) Ltd. v. The State of Madhya Pradesh and Ors. (AIR 1953 SC 221) [Supreme Court of India]: This case was cited to support the principle that when a pre-existing right of appeal continues to exist, the old law which created the right of appeal also exists to support the continuation of that right. The Court emphasized that rights under the old statute are not destroyed in the absence of a contrary intention in the repealing enactment.
• M/s Gurcharan Singh Baldev Singh v. Yashwant Singh and Ors. (1992 (1) SCC 428) [Supreme Court of India]: This case was referenced to affirm that the right to proper consideration of an application by a statutory authority remains alive even after the repeal of the enactment under which the consideration had been sought.
• Chief Adjudication Officer v. Maguire (Simon Brown LJ) (1999 (2) All ER 859): This case was cited to define the scope of “inchoate rights, obligations, and liabilities.” The court noted that Section 16 of the 1978 Act contemplates situations where an investigation, legal proceeding, or remedy may have to be instituted before the right or liability can be enforced.
• Section 6 of the General Clauses Act, 1897: As described above, this provision preserves rights and liabilities accrued under repealed enactments unless a different intention appears.
• Section 24B(1) of the Patents Act: As described above, this provision pertains to the grant of exclusive rights.

Authority Treatment Table

Judgment

How each submission made by the Parties was treated by the Court?

How each authority was viewed by the Court?

• M/s Hoosain Kasam Dada (India) Ltd. v. The State of Madhya Pradesh and Ors. (AIR 1953 SC 221) [Supreme Court of India]: The Court followed this authority, emphasizing that pre-existing rights are preserved unless a contrary intention appears in the repealing enactment.
• M/s Gurcharan Singh Baldev Singh v. Yashwant Singh and Ors. (1992 (1) SCC 428) [Supreme Court of India]: The Court followed this authority, affirming that the right to proper consideration of an application remains alive even after the repeal of the relevant enactment.
• Chief Adjudication Officer v. Maguire (Simon Brown LJ) (1999 (2) All ER 859): The Court followed this authority, adopting the interpretation of “inchoate rights, obligations, and liabilities.”
• Section 6 of the General Clauses Act, 1897: The Court applied this section to determine the effect of the repeal of Chapter IV-A of the Patents Act, preserving accrued rights.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the principle that repealing a law should not automatically extinguish rights that had already accrued under the old law. The Court emphasized the importance of protecting vested rights and ensuring fairness in legal proceedings. The sentiment analysis of the Court’s reasoning highlights the following points:

• Preservation of Accrued Rights: The Court strongly emphasized the need to protect rights that had already been acquired or were in the process of being acquired under the old law.
• Fairness and Equity: The Court’s reasoning reflects a concern for fairness and equity, ensuring that parties are not unfairly disadvantaged by changes in the law.
• Statutory Interpretation: The Court relied on established principles of statutory interpretation, such as Section 6 of the General Clauses Act, to determine the effect of the repeal.

Fact:Law

The ratio of fact to law that influenced the court to decide the case can be analyzed as follows:

• Fact: Percentage of the consideration of the factual aspects of the case.
• Law: Percentage of legal considerations.

Logical Reasoning

The following flowchart demonstrates the Court’s logical reasoning regarding the effect of repeal:

Key Takeaways

• Preservation of Rights: Repealing a law does not automatically extinguish rights that have already accrued under the old law.
• Application of General Clauses Act: Section 6 of the General Clauses Act plays a crucial role in determining the effect of repeal, ensuring that vested rights are protected.
• Fairness in Legal Proceedings: Courts prioritize fairness and equity, ensuring that parties are not unfairly disadvantaged by changes in the law.

Directions

The Supreme Court allowed the appeal but without any order as to costs. The order of the Division Bench was set aside, and the order of the learned Single Judge was allowed to operate.

Conclusion

In summary, the Supreme Court’s judgment in the Glaxo Smith Kline PLC vs. Controller of Patents & Designs case clarifies that the repeal of Chapter IV-A of the Patents Act does not automatically extinguish rights that had already accrued under the old law. The Court emphasized the importance of protecting vested rights and ensuring fairness in legal proceedings, relying on Section 6 of the General Clauses Act to preserve accrued rights and liabilities. The appeal was allowed, setting aside the Division Bench’s order and reinstating the Single Judge’s order, without any order as to costs.