Bayer Corporation v. Union of India, 2014 (60) PTC 277 (Bom)

Aug 20, 2018 | Indian Patents Act 1970, IPR & Business

Bayer Corporation, a US based corporation had a patented drug in India under the brand name Nexavar. This landmark judgement became the first case where a compulsory license was issued after India became a signatory to Trade Related Aspects of Intellectual Property Rights [TRIPS] and also to the Doha Declaration in 2001. The Intellectual Property Appellate Board [IPAB] elaborated the grounds and conditions for compulsory licenses. Brief facts of the case are as follows:

1. Bayer Corporation, a US based corporation which developed “Sorafenib Tosylate” sold under the patented drug “Nexavar” [Patent Number IN 215758] for curing kidney cancer. The drug relieves the pain and slows down the spread of cancer.
2. Compulsory license for Nexavar was granted to Natco Pharmaceuticals Ltd. (hereinafter referred as Natco Pharma).
3. On 3^rd Mar, 2008, Bayer Corporation was granted a patent in India for “Nexavar”
4. On 6^th Dec, 2010, Natco Pharma approached Bayer Corporation for grant of voluntary license of the patented drug.
5. Bayer Corporation was selling the drugs at Rs 2, 80,428 per month for 30 tablets. Natco Pharma proposed to sell the same drug at Rs 10,000/- per month to make it available at an affordable price in India. Later Bayer Corporation rejected this offer.
6. On the other hand, CIPLA Ltd (hereinafter referred as CIPLA), another Indian Pharmaceutical, was already selling the drugs as “Soranib” at Rs 30,000/- for a month later it sold at Rs. 5,400/-. CIPLA didn’t take prior permission or license from Bayer Corporation and hence was undergoing litigation in Delhi High Court for infringement of Bayer Corporation’s Patent.
7. On 29^th July, 2011, Natco Pharma applied to the controller of Patents for grant of Compulsory License under Section 84(1) (3) of Patent Act, 1970.
8. The controller drafted the terms and conditions of the compulsory license and awarded a 6% royalty from profits to Bayer. Then Bayer appealed the Controller’s decision before IPAB.

Issues

The main issues before the Hon’ble Court were:

1. Whether the requirements for the grant of compulsory licensing are fulfilled?
2. Whether the decision of the controller to grant compulsory license to Natco Pharma with a royalty at 6% of its net sales to Bayer Corporation was valid?
3. Whether the supplies by Natco Pharma & CIPLA of the disputed drug have to be taken into account to determine the satisfaction of reasonable requirement test?

Arguments by the parties

By Plaintiff i.e., Bayer Corporation

 Bayer Corporation alleged that if the Sorafenib Tosylate drug was already available in the market at affordable prices, then section 84(1) (b) of the Patents Act, 1970 cannot be one of the issues.

1. The cost of inventing the drug is high and the corporation has invested a huge amount on research and development.
2. Furthermore, they argued that the controller has ignored the mandatory nature of Section 90(1) (i) [7] of the Patent’s Act, 1970, as it has not taken into account the cost of invention incurred while fixing the royalties.
3. Bayer contended that the utilization of “sale” along with “import” excluded the term “export” from the meaning of the expression “sale”. Section 84 and Section 92A has used the term “export” expressly. Therefore, the court should not accept Natco Pharma’s contention that an export transaction is covered by sale.

By Respondent i.e., Natco Pharma

The price charged by Bayer Corporation was not an affordable price when compared to purchasing power of the public or to meet the requirements in the market and hence Bayer Corporation contravened the Patent Act.

1. They argued that the charitable program i.e., Patient Assistance Program [PAP] of Bayer Corporation is discretionary and conditional. Therefore, cannot be applied for public.
2. Furthermore they stated that the IPAB has complied with Section 90 of the Patents Act, 1970 as they enhanced the royalty from 6% to 7%.

Judgement

Court relying on various judgments held that:

“The Hon’ble Supreme Court dismissed the SLP filed by the Bayer Corporation and upheld the decision of Bombay High Court providing compulsory licensing for a life-saving drug named ‘Nexavar’. The High Court judgement relied on the fact that even after taking Cipla’s supplies into consideration, the public prerequisite would not be met and commitment to meet the reasonable requirement of the general public must be of the patent holder alone, either by patentee himself or through his licensees. The charitable program by Bayer Corporation was unaccepted as a defense for Section 84 (1) (b) of the Patent Act, which insists on the fact that the patented drug should be made available to the public at a fairly affordable price i.e. to any portion of the public tendering the price. It was also held that the term “exports” is employed in different contexts in Sections 84, 90 and 92A all of which deal with compulsory licensing. The court observed that when it comes to drugs the sufficient extent test has to be 100% i.e. to the fullest extent. Under Doha declaration the concept of compulsory licensing empowers the government to provide an organization to use the patent technology and the use of patented product even without the real owner’s consent. In the present case, Natco Pharma fulfilled all the conditions for compulsory licensing.”

The judgement strikes a balance between the issues pertaining to public interest and also those made in regard to patentee’s rights. It demonstrates the focus of Indian Pharmaceutical patent law, which indeed pushes towards affordable access to the larger public and the Court’s primary concern is that of public interest.

Hence, the High Court then dismissed the petition of Bayer Corporation.

By: Runjhun Sharma, School of Law, Mody University

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