Case Brief: Bayer Corporation v Union of India (2014) Bombay HC

Case Name: Bayer Corporation vs Union of India (2014) Bombay HC Writ Petition No.1323 OF 2013

Court: Bombay High Court

Bench

1. Mohit S. Shah, C.J.
2. S. Sanklecha, J.

Parties 

Petitioner

Bayer Corporation, A Corporation Organized under the laws of the State of Indiana, Unites States of America-100 Bayer Road, Pittsburgh, PA 1505-9741, United States of America.

Respondents

1.  Union of India through the Secretary department of Industrial Policy and Promotion Ministry of Commerce and Industry, Udyog Bhavan, New Delhi.
2. The Controller of Patents, The Patent Office Bhoudhik Sampada Bhavan, S.M.Road, Antop Hill, Mumbai-400037.
3. Natco Pharma Limited, Natco House, Road No.2, Banjara Hills, Hyderabad 500-033, Andhara Pradesh.

Introduction

The Intellectual Property Appellate Board upheld the Controller of Patents’ decision to give India’s first compulsory licence and clarified the circumstances under which such licences are permissible.

Facts related to the case Bayer Corporation v Union of India and Others

• The active pharmaceutical substance “Sorafenib,” which is used to treat liver and kidney cancer, was patented in India by the Bayer Corporation, a German company (Patent No. IN 215758). Nexavar is the brand name for sorefenib, which is sold throughout the world.

• The Indian generic company CIPLA began making and selling Soreanib, the generic form of the drug, in 2008. Before the Indian courts, Bayer accused CIPLA of infringing (not the subject of this case summary).
• When the lawsuit was filed, Bayer marketed their brand for 27,960 INR (about US $ 525) for the same number of tablets, but CIPLA’s generic counterpart was sold for 280,438 INR (around US $5280) each month.
• Natco Pharma Limited, a different generic manufacturer, submitted a request for a compulsory licence in opposition to Bayer’s Sorafenib patent before the Controller of Patents During the ongoing dispute between CIPLA and Bayer. Based on Section 84 (1) of the Indian Patent Act of 1970, as revised in 2005, Natco requested the compulsory licence.
• Section 84 (1) of the Indian Patent Act after the amendment provides for compulsory license after the expiration of 3 years from the date of the grant of a patent from any of the following grounds:

1. The public’s reasonable expectations regarding the patented innovation have not been met, or
2. the patented invention is not provided to the public at a price that is reasonable and affordable, or
3. the patented invention

• The Controller determined that Natco Pharma deserved a mandatory licence since Bayer had not complied with S. 84 of the Patents Act of 1970. The obligatory license’s terms and conditions were written by the Controller, who also gave Bayer a 6% profit-sharing fee. The Controller’s judgement was challenged by Bayer before the Indian Intellectual Property Appellate Board (IPAB).

Issues

Whether the grounds for the issuance of compulsory licence are met?

Whether the controller has the right to grant Natco Pharma a compulsorily granted licence with a royalty of 6% of its sales revenue to Bayer Corporation?

Does the reasonable requirement test have to be satisfied in order to consider Natco Pharma & CIPLA’s deliveries of the disputed drug?

Laws involved in Bayer Corporation v. Union of India

• Section 84(1) (3) of Patent Act, 1970– It states that after the expiration of three years from the date of grant of patent any person may make an application for grant of compulsory licence on three grounds – the reasonable requirements of the public have not been satisfied or the patented invention is not available to the public at an affordable price or the patented invention is not worked in the territory of India.
• Section 90(1) [7] of the Patent’s Act, 1970–  the licence is granted with a predominant purpose of supply in the Indian market and that the licensee may also export the patented product, if need be in accordance with the provisions of sub-clause (iii) of clause (a) of sub-section (7) of section 84.
•   Section 84 of the Patent’s Act,1970-  An application under this section may be made by any person notwithstanding that he is already the holder of a licence under the patent and no person shall be estopped from alleging that the reasonable requirements of the public with respect to the patented invention are not satisfied or that the patented invention is not worked in the territory of India.
• Section 92A of the Patent’s Act,1970-  Compulsory licence shall be available for manufacture and export of patented pharmaceutical products to any country having insufficient or no manufacturing capacity in the pharmaceutical sector for the concerned product to address public health problems, provided compulsory licence has been granted by such country or such country has, by notification or otherwise, allowed importation of the patented pharmaceutical products from India.

Arguments by The Parties

1. By Plaintiff i.e., Bayer Corporation

• The Sorafenib Tosylate drug had already been widely accessible and reasonably priced, according to Bayer Corporation, hence section 84(1)(b) of the Patents Act of 1970 could not be a factor.
• The company has spent a sizable sum on development and research despite the exorbitant expense of the drug’s invention.
• In addition, they claimed that the controller had disregarded the requirement of Section 90(1) I [7] of the Patent Act of 1970 by failing to take the cost of invention into account when determining the royalties.
• Bayer argued that the word “export” was not included in the definition of “sell” because it was used in conjunction with the word “import”. Sections 84 and 92A specifically employ the word “export” in their language. Therefore, the court shouldn’t accept Natco Pharma’s argument that a sale covers an export transaction.

2. By Respondent i.e., Natco Pharma

• As a result, Bayer Corporation violated the Patent Act because the price it demanded was not reasonable given the average person’s purchasing power or the market’s needs.
• They claimed that the Patient Assistance Activity [PAP] of Bayer Corporation is a discretionary and constrained philanthropic programme. Thus, it cannot be used by the general public.
• Furthermore, they claimed that by raising the royalty from 6% to 7%, the IPAB had complied with Section 90 of the Patents Act of 1970.

Held

Court held, relying on various judgements, that:

The Bombay High Court’s order requiring compulsory licencing for the life-saving medicine “Nexavar” was upheld by the Hon. Supreme Court, but the court dismissed the SLP filed by the Bayer Corporation. The High Court’s judgment was based on the argument that despite taking Cipla’s supplies into account, the public requirement would not be satisfied, and that the patent holder solely was responsible for fulfilling the reasonable needs of the general public, either directly or through his licensees.

A defence was rejected against Section 84 (1) (b) of the Patent Act, which demands that the patented medicament be made available to the public at a reasonably affordable price, or to any segment of the public tendering the price. This was due to the philanthropic initiative of Bayer Corporation. Additionally, it was decided that while Sections 84, 90, and 92A all deal with mandatory licencing, the term “exports” is used in several situations. The court stated that the appropriate extent test for drugs must be 100%, or to the utmost degree possible.

The Doha Declaration’s idea of compulsory licencing gives the government the authority to grant a company permission to exploit patented technology and products even without the actual owner’s approval. Natco Pharma met all requirements for mandatory licencing in this instance.

The judgment finds a balance between arguments made about the public interest and those made regarding the rights of the patentee. It illustrates the emphasis of Indian Pharmaceutical Patent Law, which does in fact push for more cheap access for the general people, and the Court’s main concern is the public interest.

The High Court subsequently dismissed Bayer Corporation’s petition as a result.

This article has been contributed by Siddhi Parmar, a student at MP Law college, Aurangabad.