4.16 India further advanced that the mailbox system it had established was consistent with Indian law.

• Section 6 of the Patents Act permitted the receipt of any application for a patent that related to an "invention". Section 2(1)(j) of the Patents Act defined an invention to include "any new and useful substance produced by manufacture" and "any new and useful improvement of them". This definition was broad enough to include new pharmaceutical and agricultural chemical products.

• Section 3 of the Patents Act set forth certain categories of inventions or alleged inventions which were not considered inventions within the meaning of the Act. Since pharmaceutical and agricultural chemical products per se were not excluded under Section 3, they were "inventions" in respect of which applications might be received under Section 6 of the Act.

• Section 5 of the Act recognized that there might be an invention in relation to a pharmaceutical or agricultural chemical product, but provided that such an invention was patentable only with respect to the process by which it was made and not with respect to the product itself. Therefore, Section 5 of the Patents Act only prohibited the grant of a patent for such a product, not the receipt of an application for a patent for such a product.

• Accordingly, Section 6 of the Patents Act as interpreted and applied administratively did provide a "means" for the receipt of applications for product patents for pharmaceuticals and agricultural chemicals. These applications were being identified and placed in a separate category by the Patent Offices and were not being examined. They were also being allotted a filing date, a serial number and a title, which would entitle them to priority when pharmaceutical and agricultural chemical product patents were finally granted. Further, they were not being rejected because they were not being referred by the Controller of Patents to examiners for examination under Section 12(1) of the Patents Act. This was because, following interdepartmental consultations, the Indian executive authorities had issued administrative instructions to the Controller of Patents not to refer mailbox applications for examination by an examiner until the Patents Act was amended to provide for product patents for pharmaceutical and agricultural chemical products.

• Contrary to the assertions of the Panel and the Appellate Body in the previous case, there was no conflict between the above exercise of executive power under Article 73 of India's Constitution and Section 12(1) of the Patents Act. Although Section 12(1) mandated that the Controller must refer all applications to an examiner, it did not specify any time for doing so. In light of this statutory silence, the executive power of the Government of India extended to specifying a reasonable time for referring applications for examination in order to fulfil India's obligations under Article 70.8(a). Therefore, there was no conflict between the administrative instructions in question and Section 12(1) of the Patents Act. This followed from the fundamental principle of statutory interpretation in Indian domestic law that a statutory provision must be interpreted consistently with India’s international obligations, whether under customary international law or an international treaty or convention. In this context, Justice G.P. Singh, one of the leading authorities on the principles of statutory interpretation in India and a former Chief Justice of the High Court of the State of Madhya Pradesh, had stated as follows⁴⁹:

• Under Indian law, there was also another independent principle of statutory interpretation, namely that, even where a statutory provision specified a time for performing a statutory duty, the time specified was only directory and not mandatory. Thus, Justice Singh noted that:

• Further, Article 73 of India's Constitution conferred upon the Government of India executive power of the widest latitude over all subjects in which Parliament had legislative competence. This power extended to filling lacuna administratively in statutes, rules or regulations.⁵⁶ The executive power of the Government of India to enter into, and implement treaties, was derived from the legislative power of the Union of India incorporated in Articles 246 and 253 read with Entry 14 of List I of the Seventh Schedule of the Indian Constitution.⁵⁷ The Government of India also had executive power over "patents, inventions and designs", which fell under Entry 49 of List I. Based on these powers, the Government of India had decided to store applications for pharmaceutical and agricultural chemical products separately for future action under Article 70.8 and 70.9 of the TRIPS Agreement and to instruct the Controller of Patents not to refer them to an examiner until 2005.

• In addition, the Government of India had also bound itself to observe its obligations under Article 70.8 by virtue of a statement in Parliament. On 2 August 1996, the Government had stated in Parliament as follows:

Such statements were considered binding upon the Government under the Indian Constitution.

4.17 Further, according to India, mailbox applications could not be challenged in Indian courts and invalidated under the Patents Act.⁵⁸

• Contrary to what the Panel had found in the earlier dispute (WT/DS50) on the basis of the limited evidence submitted to it, an Indian court would never examine a request by a competitor to force the Controller of Patents to refer a mailbox application to an examiner for examination. In fact, such a request could not be entertained because basic principles of standing and ripeness dictated the rejection of challenges to contingent, future rights such as those of mailbox applicants to receive patents in the year 2005.⁵⁹ A mailbox application gave an applicant only a right to receive a patent for a pharmaceutical or agricultural chemical product in the future when India would provide for the grant of such patents under its Patents Act. Further, the applicant must satisfy the Patent Office that the applicable criteria for the grant of a patent under the Patents Act were met. Thus, a mailbox application gave an applicant at best a contingent, future right, which - under the principles of standing and ripeness applied in India as in other common law countries - could never be successfully challenged in court. This was confirmed by the fact that none of the mailbox applications which India had received and published in the Gazette of India had been challenged in court.

• The EC had not demonstrated that mailbox applications would not survive legal challenge under the Patents Act.

• Interpretation of domestic laws would inevitably be uncertain until a competent court had spoken. How could a Member in the meantime demonstrate that its authorities were acting on the basis of the correct interpretation? Since mailbox applications could not be challenged in Indian courts, how could India under these circumstances ever rebut a presumption that mailbox applications would not survive challenge in Indian courts?

4.18 Finally, India argued that applications had been received, and continued to be received, by the Patent Office and stored for future action. They were recorded and published in the Gazette of India; therefore, the necessary facts were there to determine the novelty and priority of the inventions in question in accordance with the dates of these applications and to decide on the grant of patents on them when their patentability would be due in accordance with Article 70.8(b) and (c).

• Between 1 January 1995 and 31 January 1998, India had received 2,212 mailbox applications, not one of which had been rejected or invalidated. All mailbox applications - including their serial numbers, dates, name of applicant and the titles - were advertised in the Gazette of India. This advertisement was made irrespective of whether the product for which the patent was sought was patentable. There was nothing in Indian law that prevented the Patent Office from receiving and storing the applications for future action under Article 70.8 of the TRIPS Agreement, and the record of the applications advertised in the Gazette of India could obviously not be erased. The registration, dating, storage and publication of these applications could therefore not be litigated out of existence. There was consequently nothing that could possibly prevent India, when patents were due in accordance with subparagraphs (b) and (c) of Article 70.8, from deciding to grant such patents on the basis of the applications currently submitted and determine the novelty and priority of the inventions in accordance with the date of these applications.

4.19 The European Communities and their member States were of the view that India had not advanced any new elements that had not yet been considered in the earlier dispute or that were otherwise relevant for the resolution of the present dispute.

• India basically claimed that Section 5 of its Patents Act prohibited the grant of a patent for pharmaceutical or agricultural chemical products without however prohibiting the filing of an application for such products. India furthermore claimed that, therefore, the filing of an application for such products was possible under Section 6 and, thus, constituted a sufficient "means" for the filing of an application under Article 70.8(a) of the TRIPS Agreement. These arguments were not new, since these provisions of the Indian Patents Act had been submitted to the Panel in the earlier dispute and had not been amended since. They were not relevant, because Section 15(2) of the Indian Patents Act, which was of mandatory nature, instructed the Controller to refuse an application for an invention that was not patentable under the Act. The possibility of the filing of an application that must be refused under a mandatory provision of the domestic legislation of a WTO Member did not constitute an adequate "means" for the filing of an application under Article 70.8(a) of the TRIPS Agreement.

• India moreover claimed that under Section 12(1) of the Indian Patents Act, no time was specified for the referral of an application to an examiner. Therefore, in India's view, there was no conflict between the administrative instructions of the Indian executive authorities to the Controller of Patents and Section 12(1) of the Patents Act. This question had been extensively discussed in the earlier dispute, in particular in paragraph 7.35 of the Panel report in the earlier dispute and in paragraph 69 of the Appellate Body report in that dispute. The EC believed that everything necessary had already been said with regard to this question. Given this discussion, the EC could not agree with India that the terms of its Patents Act were unclear as to the action to be taken by the Controller once an application had been filed or with regard to the timing of such action. Under these circumstances, the EC could not see the relevance of the statement of Justice G.P. Singh quoted by India in the context of the present dispute. The same went with regard to the argument that statutory time-limits were not mandatory since it was in apparent contradiction with the terms of the Indian Patents Act, which did not allow any delay in the referral of an application to an examiner. In other words, Section 12(1) of the Indian Patents Act simply did not contain a time-limit, since it provided for immediate action; the section started with the word "when", which did not provide for any delay. Again, the EC failed to see a lacuna that could be filled in by administrative instructions.

• The statement made by the Indian Government before the Indian Parliament on 2 August 1996 had already been mentioned in the earlier dispute. Whatever declarations the Indian Government might have made before the Parliament or elsewhere, they did not change the fact that the Indian Patents Act contained in Section 12(1) a mandatory provision requiring the Controller to refer any application to an examiner "[w]hen the complete specification has been filed in respect of an application for a patent". Moreover, as already stated before, Section 15(2) of the Indian Patents Act required the Controller to refuse an application if it appeared to him that the invention claimed in the specification was not patentable under the Act. Both provisions contained the auxiliary "shall", which did not allow the exercise of any discretion by the Controller.

• It was obvious that the Indian authorities themselves had come to the conclusion that the existing Patents Act of 1970 did not suffice to bring India's domestic legislation into conformity with its obligations under Article 70.8(a) of the TRIPS Agreement when they had decided at the end of 1994 to promulgate the Patents (Amendment) Ordinance, 1994, in order to remedy the apparent shortcomings of the existing Patents Act of 1970. For the same reason, India had submitted a Bill to its Parliament aiming at an amendment of the Patents Act of 1970. India’s assertion in the present dispute that the Patents Act of 1970 was in compliance with its obligations under Article 70.8 of the TRIPS Agreement, although the proposed amendment had never been enacted, was simply not credible.

• India had also referred to the principles of standing and ripeness which would prevent a challenge in India's courts with a view to force the Controller of Patents to refer a mailbox application to an examiner for examination. Even if this were correct, this did not exclude the possibility of other forms of private disputes concerning the novelty and the priority of a mailbox filing. In particular, the EC could not see any reason why litigation between two or more applicants about the time or the formalities of a filing under Article 70.8(a) of the TRIPS Agreement could not lead to litigation before an Indian court at any time before the year 2005. A dispute on the relevant filing date could, in particular, arise before the year 2005 as a preliminary issue in the context of a court procedure regarding the granting of an exclusive marketing right under Article 70.9 of the TRIPS Agreement. In such court procedures, the fact that there was presently no legal basis in India for the filing of a mailbox application made it impossible, or at least unnecessarily difficult, for an applicant to defend his position in the Indian courts. The fact that so far no mailbox application had been challenged in the Indian courts was in this context irrelevant, since it might be based precisely on the fragile status of such applications in India. Moreover, India did not even contest that such disputes could arise after the year 2005 and would then have to be judged under the law applicable at the time of filing. In other words, the legal uncertainty created by the present Indian legal situation would be carried forward into the future.

4.20 India replied that, by arguing that India's interpretation of its own laws was incorrect and inviting the Panel to adopt another interpretation of India's Patents Act, the EC again failed to address the basic issue before the Panel.

• According to the consistent jurisprudence of international tribunals, including the Appellate Body, Indian law could not be interpreted by this Panel, but must be treated as a fact. It was therefore not relevant for this Panel whether India had acted consistently with its own laws. The Panel was bound to presume that this was so because only Indian courts could decide that question. What was relevant for this Panel was whether the measures which India had taken were consistent with the TRIPS Agreement, i.e. whether India had applied its laws in such a manner as to provide a means of filing mailbox applications.

• The EC did not contest that India received, published and stored mailbox applications and that all such applications had remained unchallenged. Moreover, the EC confirmed that about one thousand EC companies had made use of India's mailbox system. The EC thus did not deny that India had in fact provided a means of filing patent applications for pharmaceutical and agricultural chemical products.

• The EC's only claim was that this means of filing was inconsistent with Indian law and that, because of the resulting legal uncertainty, the means of filing was also inconsistent with India's obligation under Article 70.8 of the TRIPS Agreement. It was thus perfectly clear from the EC's argumentation that the Panel could make the requested ruling on the alleged inconsistency with the TRIPS Agreement only if it first found the mailbox system to be inconsistent with Indian law. That finding, however, this Panel was not authorized to make.

Continuation: Article 70.9 of the TRIPS Agreement

⁴⁹ Justice G. P. Singh, Principles of Statutory Interpretation, Wadhwa & Co., Nagpur, 6th ed., 1996, pages 380-81

⁵⁰ Salamon v. Commr. of Customs and Excise, (1996) All ER 871 (CA), page 875, etc.

⁵¹ Maneka Gandhi v. Union of India, (1978) 1 SCC 248

⁵² Jolly George Verghese v. Bank of Cochin, (1980) 2 SCC 360

⁵³ Kubic Dariusz v. Union of India, AIR 1990 SC 470

⁵⁴ People's Union for Civil Liberties v. Union of India, (1997) 1 SCC 301

⁵⁵ Justice G. P. Singh, supra note 49, pages 244-245

⁵⁶ Union of India vs. H. R. Patankar and Others, (1984) Supp. SCC 359; and J. R. Raghupathy vs. State of A.P., (1988) 4 SCC 364

⁵⁷ Maganbhai v. Union of India, (1970) 3 SCC 401

⁵⁸ In response to a question from the Panel as to whether general Indian law allowed for the possibility of administrative decisions (including decisions not to act in particular circumstances) to be challenged in an administrative tribunal or other judicial body, in particular on grounds of inconsistency with a statutory provision, India informed the Panel that Article 226 of the Indian Constitution has been interpreted as giving the High Court the power of judicial legislative and administrative action. This includes the power to review administrative regulations or instructions on the ground that they violate statutory provisions. The High Court is the highest court in each State and is the intermediate appellate court in India's unified system of courts. In response to a follow-up question from the Panel, India provided more detailed information to the Panel on this review possibility. In exercising this authority, the main principles guiding the High Court are: According to a well-established principle of Indian administrative law, administrative instructions cannot be issued on any matter which is the subject of legislation. Wherever there is no statutory provision or where there are gaps in any enactment, the same can be provided or bridged by issue of necessary administrative instructions. The only rider on the authority to issue such administrative instructions is that there should be no statutory provision either expressly or by necessary implications to the contrary. Administrative acts done in the purported exercise of a statutory power can be invalidated by the Court, if constitutional limits or statutory powers have been transgressed.  Judicial review in respect of administrative acts not done in the purported exercise of a statutory power, but in the exercise of the executive power, is directed towards its manner and mode, and not the administrative decision taken on merits. The standard for this review is whether the exercise of the discretionary power has been "unfair", "arbitrary" or "malafide". Neither will the Supreme Court or High Courts interfere or adjudicate upon government policy matters, unless fundamental principles of law have been violated.

⁵⁹ In response to a question from the Panel, India informed the Panel that, to demonstrate a proper "cause of action" in a legal challenge to the validity of India's mailbox under Article 226 of the Constitution, a competitor of a mailbox applicant must demonstrate not only that his legal right has been violated as a result of the establishment of the mailbox but also must make a showing of actual damage suffered as a result of the mailbox. A mailbox application would result in the grant of a patent or exclusive marketing right ("EMR") only if and when: (i) India amended the Patents Act to provide for the grant of product patents for pharmaceutical and agricultural chemical products under its Patents Act; and (ii) the mailbox application satisfied any relevant criteria for the grant of a patent or EMR, as the case may be, under the amended Patents Act. Until these conditions were satisfied, no competitor of a mailbox applicant will be able to demonstrate this merely because a mailbox application for a competing product has been received for the grant of a patent or an EMR in the future. Accordingly, an Indian court would reject his legal challenge to India's mailbox on the ground that he cannot demonstrate that he has suffered actual damage.