This Case Commentary is written by Gurleen Kaur, a Fourth-Year law student of St. Soldier Law College

Citation: (2014) 245 Bom LR 551

Court: Bombay High Court

Date of Judgement: March 14, 2014

Bench: Mohit S. Shah, C.J.

S. Sanklecha, J.

parties:

Petitioner- Bayer corporation, a corporation organized under the laws of the state of Indiana United States of America- 100 Bayer Road, Pittsburgh, PA, 505-9741, United States of America.

Respondent- 1. Union of India through the Industrial Policy and Promotion Ministry of Commerce and industry, udyog bhavan, New Delhi.

2. the controller of patent, The patent office Bhoudhik Sampada Bhavan, S.M. Road, Antop Hill, Mumbai- 40037.

3. Natco Pharma Limited, Natco House, Road No. 2, Banjara Hills, Hyderabad 500-033, Andhra Pradesh.

Introduction

This judgment addresses the issues of intellectual property, especially Patent rights. This case revolves around the grant of a compulsory license to Natco Pharma Limited to manufacture and sell an Alternative version of Bayer’s patented drug Sorafenib Tosylate.

To understand this judgment in more detail, imagine there is a lifesaving drug that can cure the deadly disease of kidney cancer. But it is too expensive for the layman to afford and the company that made this drug had a patent that gave them exclusive rights to produce and sell it. For the convenience and health welfare of the people, the Indian government stepped in this matter and allowed another company, Natco Pharma, to make the same drug in a cheaper version.

Then Bayer Corporation took the government to court and contended that this was a violation of their patent rights.

Now court needs to balance two important issues:

1. Bayer’s right to profit from their invention (Patent rights)

2. The public’s need for affordable access to life-saving medicine (Public needs).

In this case commentary, we will discuss the court’s decision on this matter and how it will be remarked as meaningful for the future of Patent rights and public health. Here, we will explore the legal issues, facts of the case, and the judicial decision and critical analysis of it in simpler terms, making it easy to understand this complex, but important case.

Background and Facts:

In the year 2005, Bayer Corporation made a drug named Sorafenib Tosylate (Nexavar), and in the year 2007, it was approved by the US FDA for the treatment of kidney and liver cancer. In 2008, Nexavar was patented in India with a patent term of 20 years (until 2028). The Indian Government introduced the National Pharmaceutical Pricing Policy in the year 2010, the primary motive behind this is to make essential medicines more affordable for the layman. Natco Pharma company had applied for the compulsory license to sell and manufacture the alternative version of the drug made by Nexavar with an affordable and reasonable price tag. This license was applied in the year 2011. Natco’s application was even supported by the Cancer Patients Aid Association (CPAA) which is a non-profit organization, then Natco got his approval and started manufacturing and selling this drug at lower prices compared to Bayer's Corp.

The facts of this case are discussed below:

● Bayer sold Nexavar at a high price (around Rs.280,000 or USD 4,000 per month’s treatment), which is not very affordable for many Indian cancer patients.

● Then Natco offered to sell the alternative version at a lower price compared to Bayer’s corporation (around Rs.8,800 or USD 130 per month’s treatment).

● After learning about this offer, the Indian Patent Office granted a compulsory license to Natco in the year 2012, allowing them to manufacture and sell the drug at the lowest price for the welfare of society.

● The licensee of the patent was granted under Section 84 of the Indian Patents Act, 1970, which permits compulsory licensing if:

- If the Patented invention was not available for the public at a reasonable price.

- The patent does not work in the territory of India.

- Enough is not made available for the people.

● Bayer challenged this decision in the Bombay High Court, arguing that:

- The compulsory license’s grant has violated their patent rights.

- They had made Nexavar available at a reasonable price (via patient assistance program).

- Application by Natco was not made in good faith.

● The grant of a Compulsory license was further defended by the Indian Government with a contention:

- That drug was not made available at a reasonable price by the Bayer Corporation.

- Even though the drug was not conveniently available in India, only 2% of the market was served.

- To ensure public health and public welfare, the grant of a compulsory license was necessary.

Legal Framework and Issues:[1]

This judgment raises many issues like patent rights vs public health, stating that there should be a balance between the rights of patent holders with the need for affordable healthcare and the important drugs that should be affordable for the public. Compulsory Licensing, where the government can grant a compulsory license to genetic manufacturers, bypassing patent exclusivity. Also ensuring that these life-saving drugs are easily accessible and affordable for people in need. Innovation and investment, there is a huge impact of compulsory licenses on the pharmaceutical company’s incentives to further invest in research and development. Intellectual property rights, the scope, and limitations in the patent rights protection in the context of the public welfare. Government Interventions, this talks about the role of government in regulating patent rights to promote public interest and healthcare. TRIPS Agreement compliance, in this we talk about India’s obligations under the World Trade Organization’s Agreement on Trade-Related Aspects of intellectual Property rights. These are some issues that highlight the complex interconnection between the patent rights government intervention and public health welfare.

The Legal framework that takes place in this case is as follows:[2]

1. Indian Patent Act, 1970:

- Bayer's patent for Nexavar (Sorafenib) was granted under this act.

- Natco Pharma’s application for compulsory incense was granted under Section 84 of this act due to:

● expensive price charged by the Bayer Corp. which makes it inaccessible for the needy patients.

● Bayer was not adversely selling it and there is non-availability of this drug in many areas of India.

● To protect the public interest in availing the affordable healthcare

2.TRIPS Agreement (1994):

- The court balanced Bayer’s Patent rights under Article 27 of this act with the public interest in accessing affordable healthcare.

3.Doha Declaration (2001):

- This clarifies the flexibility of TRIPS in the context of a public health crisis, allowing countries to prioritize public health over patent rights.

4.Patent Rules, 2003:

- guided the procedure for granting the compulsory license.

5.Indian Constitution:

- Article 21 puts stress on the right to life which includes access to healthcare in this judgment.

- Article 47 talks about public health, justifying the government’s intervention in ensuring healthcare.

6.Judicial Precedents: the judicial precedents refer to the previous court decisions that influenced the judgment as follows:

- Novartis AG vs. Union of India (2013): in this judgment Indian Supreme Court denied Novartis a patent for its cancer drug Gilvec, stating that the company’s application for the patent does not meet the patentability criteria under Indian law. This decision set a precedent in Bayr’s case that Indian courts can deny any patent applications if it is not fulfilling the patentability grounds.

- Roche vs. Cipla (2015): this case was decided after the Bayer case and has reinforced the precedent set by Bayer. This Court grants Cipla to continue manufacturing of a generic version of Roche’s cancer drug Tarceva depending upon the principles of Compulsory license.

- Mark vs. Glenmark (2014): in this the court has set a precedent by permitting Glenmark to continue production of the generic version of the drug or the disease of diabetes Januvia made by Merck, citing the public interest in accessing affordable healthcare.

Judicial Decision and Reasoning

The Delhi High Court granted the compulsory license to Natco Pharma for Bayer’s patented drug Nexavar (sorafenib) citing that the price of this drug charged by Bayer’s Corp. was very expensive which is not affordable for many needy patients, also Bayer is not manufacturing enough which creates the scarcity or unavailability of this life-saving drug in many areas of India. So, to protect public health care, the welfare India government allows Natco to manufacture a generic version of this drug, which is less expensive, more affordable, and easily accessible for every person who needs this drug.

Bayer has stated that compulsory licenses granted by the government have infringed his patent rights, in the contention of this the court stated they had balanced Bayer's patent rights under TRIPS with the need to protect public health. Even the court recognizes that it is the government’s responsibility to ensure public health and welfare so in such situations, they can prioritize the public welfare among the patent rights. The court also ensured that compulsory license was proportionate to the needs, allowing Natco to sell the generic version at a lower price. The judges also stated that “the right to health is an integral part of the right to life.” They also emphasized that “the patent rights of the appellant (Bayer) cannot be allowed to override the larger public interest.”

Critical Evaluation and Analysis:

The decision made by the court has both strengths and weaknesses. Here, it prioritizes public health over patent rights, ensuring that needy people have easy access to medicine and it is affordable for everyone. In this judgment, the Bombay High Court stated that they have granted the compulsory license to Natco for the sake of public health and welfare but their decision was criticized by many due to the following reasons:

- The court’s decision to grant a compulsory license should be more transparent and justified as this whole decision resulted in damage to the medical industry in the long run. For that court contended that the company who is declining the compulsory incense or the patent holder contesting for their patent rights must prove that their drug is not just working but manufacturing in India and fulfilling the market and public demands, otherwise, they cannot contest for the compulsory license.

- This decision is also criticized by the US Patent Office that the grant of compulsory license hinders the path of innovations. This statement is very ironic because the US and Canada, have also granted these licenses to avail the necessary and life-saving medicine to needy people. Also, countries like Thailand and Brazil have this license for easy access to important medicines.

- Many criticize this decision through TRIPS's viewpoint that the compulsory license grants under this would have been granted only in emergencies and not in general.

Despite all these criticisms Indian judiciary proves their point that their decision of granting a compulsory license to Natco is needed and a proper balance between the public health and patent rights.

Conclusion:

In the verdict, we have concluded that this case will now be used as a precedent for future cases on compulsory license, public health, and patent rights. This case has made a strong bridge conjoining two shores of patent rights and public health with compulsory licenses. The court's decision on granting a compulsory license for the drug Sorafenib Tosylate by Nexavar has defined their priority of public health over patent rights because this drug is not a basic drug but a life-saving drug for the treatment of Cancer. This case is a perfect example for future cases where the primary issue will be patent infringement. In the case of national health welfare, the grant of compulsory license is not partial for the patent holders but a necessity for the medical patients who are suffering from that deadly disease.

REFERENCES

[1] LawBhoomi (2022) Case brief: Bayer Corporation v Union of India (2014) Bombay HC, LawBhoomi. Available at: https://lawbhoomi.com/bayer-corporation-vs-union-of-india-2014-bombay-hc/ (Accessed: 14 September 2024).

[2] Bayer Corporation vs. Union of India and others (Bayer v. Natco) India, IPAB, 2013 Bayer Corporation Vs. Union of India and Others (Bayer v. Natco) India, IPAB, 2013 | United Nations. Available at: https://unctad.org/ippcaselaw/bayer-corporation-vs-union-india-and-others-bayer-v-natco-india-ipab-2013

(Accessed: 14 September 2024).