BAYER CORPORATION VS. UNION OF INDIA 2013 INDLAW IP AB 20
FACTS
The petitioner invented and developed its patented drug to enable its administration to human beings. The patented drug is used in the treatment of patients suffering from Kidney cancer i.e. Renal Cell Carcinoma (RCC) and liver cancer.
The aforesaid patented drug acts more as a palliative i.e. relieves patients from pain and to an extent also slows down the spread of cancer by restricting the speed with which the cancer cells grow.
Bayer Corp. had acquired the patent for the salt/compound Sorafenib Tosylate in 2008 in India. The market name of the medicine/drug was Nexavar.
Natco, a drug manufacturer in India, approached the petitioner for grant of voluntary license for the purpose of manufacturing and selling the patented drug in India. The respondent (Natco) sought a voluntary license to manufacture and sell in India the patented drug under its brand name at a price of less than Rs. 10,000 per month of therapy as against the price of Rs. 2,80,428 per month of therapy charged by the petitioner.
The purpose behind obtaining the voluntary licence by Natco was to make the patented drug accessible to the public at an affordable price. When applying for the voluntary license, Natco also stated the fact that the petitioner had neither met the reasonable requirement of public nor was it reasonably priced nor had it worked in the territory of India. Eventually, the petitioner rejected Natco's application for grant of voluntary license.
Thereafter, on 29 July, 2011 i.e. after the expiry of three years from 3 March, 2008, Natco applied to the Controller for a grant of Compulsory License under Section 84 (1) of the Act. In its application, Natco pointed out that all the three conditions for the grant of Compulsory License were fulfilled/satisfied.
It was also set down that they proposed to sell the patented drug under their brand name (Nexavar) at Rs. 8,800 per month of therapy. On 9 March, 2012 the Controller via his order gave authorization to Natco to manufacture and sell the patented drug and directed to pay to the petitioner royalty at 6% of its net sales of the patented drug under its brand name which was allowed to be sold at the price of Rs. 8,800 for 120 tablets for a month of treatment. Besides, the grant of Compulsory License to Natco was non-exclusive, non-assignable and for the balance term of the patent.
ISSUE
Whether a compulsory license can be granted in favour of Natco for the production of the patented drug?
HELD
Court held that the first condition precedent to consider an application for compulsory license is that three years should have elapsed from the grant of the patent. The petitioner urges that the second condition precedent to entertain the application viz making efforts to obtain voluntary license from the patent holder on reasonable terms and conditions as mandated by Section 84 (6) of the Act has not been satisfied i.e. the applicant has not made efforts.
The authorities concluded, based on evidence like exchanged letters, that Natco made efforts to obtain a voluntary license, satisfying Section 84(6) of the Act. The Court found no reason to interfere with this conclusion. Additionally, the Court held that for a Compulsory License application, the applicant must show that one or more grounds in Section 84(1) are applicable.
The petitioner argued that the authorities must consider the number of patients needing the patented drug, noting its use is typically in the final stages of HCC or RCC Cancer and that alternatives might be chosen by doctors. The Court stressed that this assessment should be broadly based on evidence, not purely mathematical, and noted that the authorities had already considered rival statistics to determine the public's reasonable requirement.
The petitioner argued that the supply of the patented drug by infringers like Cipla should be considered in meeting public requirements. However, the authorities and Court held that such supplies are unreliable due to the ongoing infringement suit against Cipla, which could lead to an injunction halting their supply. The infringer's supplies can only be considered if a de facto license is granted by the patent holder. According to Section 84(7) of the Act, public demand for medicines must be met to 100%, ensuring availability to every patient, without compromising patent holder rights.
Section 90(1)(iii) of the Act requires the Controller to ensure that the patented drug is available at a reasonably affordable price by comparing the prices offered by the patent holder and the applicant. In this case, the petitioner's price of Rs. 2,84,000 per month versus the applicant’s Rs. 8,800 per month suggests the petitioner’s price is unreasonable. The petitioner claimed their price accounts for both the development of the drug and failed R&D costs but refused to provide their Balance Sheet as evidence. Therefore, the order declaring the drug not reasonably priced is justified.
The petitioner argued that the patented drug was considered "worked" in India through its importation, citing Article 27 of the TRIPS agreement, which mandates no discrimination between legally manufactured or imported patented products. According to Form 27, patent holders must declare whether the patented product has been worked in India either by being manufactured locally or imported. The petitioner maintained that the Act does not require the patented drug to be manufactured in India to be considered "worked" in the territory. However, the Union of India disagreed.
The Court examined Section 83 of the Act, which outlines legislative guidelines for interpreting "worked in the territory of India." These guidelines suggest that patents should not enable a monopoly on importation, implying that efforts to manufacture locally should be made. Section 83(f) further states that patents should not be abused to adversely affect international trade. Thus, when faced with a Compulsory License application, the patent holder must demonstrate that the patented invention has been worked in India, either through manufacturing or importation. If the patent holder can satisfactorily explain why the patented invention could not be manufactured locally, the importation alone can suffice to meet the requirement.
The petitioner argued that the Controller should have adjourned the consideration of Natco's compulsory license application to give the petitioner time to commercially scale the patented drug in India. The Court found no merit in this argument, stating that two conditions must be met for such an adjournment:
The time since the patent was granted must be insufficient for the patent holder to commercially scale the drug in India.
The patent holder must have taken prompt steps towards working the patented drug on a commercial scale in India.
The petitioner was granted the patent in 2008 and has manufacturing facilities in India. However, the petitioner provided no evidence of any steps taken or the promptitude of such steps to work the patent in India since 2008.In these circumstances, the Court found no fault with the order of the Controller refusing to adjourn the application for compulsory license.
The Court saw no reason to interfere with the orders dated 9 March, 2012 and 4 March, 2013 of the Controller and the Tribunal respectively granting compulsory license under Section 84 of the Patent Act to Natco.