[NOXGUARD v. NONS] Bombay HC denies interim relief to Canadian pharmaceutical company in a confidentiality agreement breach suit

Bombay High Court: While addressing a case relating to confidentiality agreement breach, the Division Bench of Arif S. Doctor and K. R. Shriram, JJ., denied interim relief to a Canadian pharmaceutical company. The Bench held that the appellant was unable to establish its case for interim relief and the case deserved to go to the trial for proper evidentiary analysis.

Alleged Infringement of the Confidentiality Agreement

The appellant, SaNOtize Research and Development Corp., a Canadian Corporation, had developed a Nitric Oxide Nasal Spray (NONS) which was a proprietorial, novel, and unique technology/method in the form of a freshly prepared formulation i.e., a Nitric Oxide Releasing Solution (NORS) having a pH and dose which could safely be sprayed into the nasal cavity and was both safe and effective for the prevention and treatment of COVID-19.

The grievance of the appellant was that the respondent, Lupin Ltd. had reached out to the appellant under the guise of exploring the possibility of collaborating with NONS for marketing in India and possible partnerships for manufacturing and distribution in various countries of the world. The appellant alleged that Lupin had obtained sensitive information pertaining to NONS for three months and later declared to have officially disengaged with the appellant for both investment and distribution.

Later on, the appellant learned that Lupin was manufacturing, marketing, and proposing for sale a Nitric Oxide Nasal Spray called NOXGUARD, the packaging of which stated as follows: “Advanced Nasal Spray, Releases Nitric Oxide from Natural Sources kills 99.99% virus within two minutes.” The packaging of NOXGUARD described it as an “Ayurvedic Proprietary Medicine” comprising only of Bijora Nimbu (Citrus Lemon i.e., citric acid) and Samudra Lavana (Sea Salt i.e., sodium cholride).

Commencement of Legal Battle

The Appellant filed the present suit contending that for over three months, a vast amount of confidential material pertaining to NONS had been shared with Lupin and that Lupin had by way of reverse engineering manufactured NOXGUARD from the information shared. It was the appellant’s stand that NOXGUARD was in fact nothing but NONS. The Court, by an interim order on 06-10-2021, restrained Lupin inter alia from selling NOXGUARD. However, by the impugned order, the Single Judge had vacated the ad interim order and dismissed the Interim Application.

Breach of Confidentiality

Noting that the appellant’s entire case is premised only upon a breach of confidentiality, the Court held that it is necessary for the appellant to succeed in unequivocally establishing the following:

a) what exactly was the confidential information;

b) that the confidential information was shared with Lupin in confidence;

c) that the confidential information shared was not in the public domain; and

d) that Lupin made use of that confidential information in the manufacture of NOXGUARD.

Analysis and Findings

To establish the alleged breach of confidentiality, the appellant contended that the following information was both confidential and proprietorial and had been used by Lupin to formulate NOXGUARD, viz.

A. The specific quantities of sodium nitrite and citric acid used in NONS.

B. The specific pH and dose of NONS.

C. The clinical trials undertaken by the appellant for establishing the safety and efficacy of NONS in killing and treating the SARS CoV-2 virus.

A. The specific quantities of citric acid and sodium nitrite in NONS:

The Court noted that the fact that nitric oxide is produced by a combination of sodium nitrite and citric acid is in the public domain. Further, the Court relied on the following grounds to reject the appellant’s claim:

  • The appellant has failed to clearly establish that it had disclosed the precise quantity of citric acid and Sodium Nitrite used in NONS to Lupin. In fact, so far citric acid is concerned, both the acid type and quantity which was used in NONS had been redacted in the information shared. While the record reflects that only “quantity less than 0.2%” (only a range) was disclosed qua the quantity of sodium nitrate used in NONS.
  • The appellant had been blowing hot & cold by saying one of the unique features of NONS was the precise quantities of citric acid and sodium nitrite on one hand, and contending that a deviation, if any, in the quantity/volume of Citric Acid and Sodium Nitrite would not be significant or material to the production of gNO on the other.
  • The application made by Lupin to Central Drugs Standard Control Organization (CDSCO) to obtain a test license to manufacture drugs, which was admittedly well prior to the Confidentiality Agreement being entered into, also mentioned that citric acid was to be used in the formulation proposed.

B. The specific pH and dose of NONS

The appellant contended that the specific pH of NONS was both confidential and proprietorial because a NONS which contained a high-level of pH could have harmful effects upon the human body and conversely a low pH could be of no efficacy. Further, it had taken a lot of research and clinical trials in order to determine and arrive at the specific pH for NONS. The Court, repelling the contentions of the appellant opined:

  • Lupin, in its application made to CDSCO had mentioned that the formulation proposed by them would have a pH of 3.7. This was before the Confidentiality Agreement had even been entered into. Hence it was in the public domain.
  • In any event the pH of NONS/ENOVID and NOXGUARD was in fact not the same. The pH of NONS/ENOVID was 3.522 and that NOXGUARD was 3.72.
  • The appellant could not establish that the specific pH of NONS had been disclosed to Lupin; on the contrary, the confidential documents only revealed that NONS had a pH of below 4.
  • Achieving the specific pH would necessarily be dependent upon the precise quantities of citric acid and sodium nitrite in NONS.

C. Clinical Trials

The Appellant had submitted that the clinical trials pertaining to the safety and efficacy of NONS were both confidential and crucial for the protection of NONS since the same determined the specific pH of NONS. The Court noted that NOXGUARD, being marketed and sold as an Ayurvedic proprietary medicine, does not need any clinical trials as per the Drugs and Cosmetics (6th Amendment) Rules, 2010. Noticeably, NOXGUARD was certified by the Ministry of Health and Family Welfare (Ayush Vibhag) as Ayurvedic medicine. Hence, the Court held that the question of ascertaining whether Lupin has used/misused the Appellant’s clinical trials does not really arise.

Similarity between NOXGUARD and NONS

While determining the claim as to whether NOXGUARD and NONS can be said to be identical and/or similar products, the Court observed the following glaring differences:

i. NONS/ENOVID claims to be a treatment and preventive for COVID-19, NOXGUARD does not.

ii. NOXGUARD has been certified by the competent authority to be an Ayurvedic proprietary formulation, which NONS is not.

Conclusion

In light of the above, the Court held that the appellant was unable to establish the alleged breach of the confidentiality agreement in order to obtain the interim relief sought by it. Accordingly, the instant appeal was dismissed.

However, the Court noted that Lupin in its Affidavit-in-Reply had accepted that the constituents of NOXGUARD and NONS were largely overlapping and that the Single Judge by the impugned order had misread the Affidavit of Thomas Abraham (Appellant’s expert) by holding it to be a chemical analysis of NOXGUARD. The Court, while opining that the Affidavit of Thomas Abraham was rather an opinion furnished based on the stated ingredients of NOXGUARD, held that the same would not aid the appellant in being granted the relief sought, since the respondents should be given an opportunity to cross-examine Thomas Abraham. Therefore, the Court directed that the appellant should lead its evidence at the trial, and the respondent should be given an opportunity to lead its own expert evidence.

[SaNOtize Research and Development Corp. v. Lupin Limited, 2022 SCC OnLine Bom 6596, Order dated 30-11-2022]


Advocates who appeared in this case :

Mr. Aspi Chinoy, Senior Advocate a/w Mr. Amol Bavare, Ms. Krishna Baruah and Ms. Vrushali Pokharna i/b Pradnya Legal for the Appellant;

Dr. Veerendra Tulzapurkar, Senior Advocate with Mr. Raj Panchmatia, Mr. Peshwan Jehangir, Mr. Pranav Sampat, Ms. Shilpa Sengar and Ms. Diya Bharma i/b Khaitan & Co. for the Respondent No.1;

Mr. Hiren Kamod with Mr. Raj Panchmatia, Mr. Peshwan Jehangir, Mr. Pranav Sampat, Ms. Shilpa Sengar and Ms. Diya Bharma i/b Khaitan & Co. for the Respondent No.2;

Mr. Dinyar Madon, Senior Advocate with Mr. Jamsheed Master, Mr. Raj Panchmatia, Mr. Peshwan Jehangir, Mr. Pranav Sampat, Ms. Shilpa Sengar and Ms. Diya Bharma i/b Khaitan & Co. for the Respondent No.3.


*Kamini Sharma, Editorial Assistant has put this report together.

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