The court's decision has global significance, since India's $26 billion generic drug industry, which supplies much of the cheap medicine used in the developing world, could be stunted if Indian law allowed global drug companies to extend the life span of patents by making minor changes to medicines.
Once a drug's patent expires, generic manufacturers can legally produce it.
Pratibha Singh, a lawyer for the Indian generic drug manufacturer Cipla, which makes a version of Glivec for less than a tenth of the original drug's selling price, said the court ruled that a patent could only be given to a new drug and not to those that are only slightly different from the original.
"Patents will be given only for genuine inventions, and repetitive patents will not be given for minor tweaks to an existing drug," Singh told reporters outside the court.
Novartis called the ruling a "setback for patients," and said patent protection was crucial to fostering investment in research to develop new and better drugs.
Ranjit Shahani, the vice chairman and managing director of Novartis India, said the court's decision made India a less attractive country for major investments by international pharmaceutical companies.
"Novartis will not invest in drug research in India. Not only Novartis. I don't think any global company is planning to research in India," he said.
The Swiss pharmaceutical giant had fought a legal battle in India since 2006 to patent a new version of Glivec, which is used mainly to treat leukemia and is known as Gleevec outside India and Europe. The earlier version of Glivec did not have an Indian patent because its development far predated the country's 2005 patent law. Novartis said Glivec was patented in nearly 40 other countries.