BAYER CORPORATION V. UNION OF INDIA

Blog authored by V. Krishna Laasya, a law student from School of Excellence in Law, Tamilnadu Dr. Ambedkar Law UniversityChennai

PARTIES: Bayer Corporation (Petitioner), Union of India

Department Industrial Policy and Promotion Ministry of Commerce and Industry-Respondent 1

Controller of Patents- Respondent 2

Natco Pharma Limited, CIPLA- Respondent 3

CITATIONS: Writ Petition No. 1323 of 2013, 2014 (60) 277 (Bom)

Bench, Form of Petition: Bombay High Court, Ordinary Original Civil Jurisdiction- Art 226 of the Indian Constitution

CORAM: Mohit S Shah- Chief Justice and MS. Sanklecha on 15 July 2014

ORDER SUMMARY

Facts in Rem[1] (From the ladder of Application for Licence- High Court)

The petitioner, is incorporated in USA. Pursuant to its R&D wing, the petitioner manufactured a drug to treat kidney and liver cancer. The drug is palliative and so, as a part of registered patent in USA, was classified as an “orphan drug”. Half of the amount spent by R&D on this particular drug invention was in turn reimbursed by the USA Government.

On 12 January 1999, the petitioner applied for an International Patent under PCT and on 5 July 2001 applied for a patent in India. The patent was in turn granted by the Controller on 3 March 2008.

Thus, the petitioner had the sole right to manufacture, sell and use the patented drug for a period of 20 years from the date of publication, by virtue of the Indian Patent Act, 1970 and compilation of International Laws and Principles. The Petitioner is also granted the sole right to prevent drug usage and sale by third parties.

Natco Intervention

On 6 December 2010, Natco- A drug manufacturer applied for a voluntary licence from the manufacturer on reasonable terms to make the drug available to the common public at an affordable price. On 27 December, this request was denied and sent a communication for Natco to add any further details in the notice originally sent.

Natco applied to the Controller, after expiry of 3 years from date of Patent Application under S. 84 and stated that the drug would be provided at a reasonable rate to a wider audience.

Controller furtheron, published the application in the official Journal through S. 87 calling for opposition.

The Petitioner filed an opposition on 18 November 2011 against granting a compulsory license to Natco.

Tribunal Order

The Tribunal vide Order on 4 March 2013, granted the compulsory license authority too Natco and increased the royalty to 7% of the patented drug Sales.

Submissions

Petitioner[2]

  • The Petitioner contended that the drug by Natco was only an imitation and not a novel invention.
  • Contended that in absence of any conflicting provision of the Drugs Act, S. 2 of the Drugs Act must be read along with S. 48 to state that the burden is imposed on Drug Controller to make decisions relating to drug market approval.

Respondent

  • Court is to exercise extra ordinary jurisdiction only if the order suffers from any errors on face of record and since the order of the Tribunal does not fall within the parameters laid, the Court need not exercise extra ordinary jurisdiction.
  • Since the Petitioner rejected the efforts of Natco to obtain a voluntary licence, Natco Had to approach the Controller to obtain compulsory licence vide S. 84 of the Act.
  • The price at which the Petitioner wants to sell the drug is very unreasonable and even after PAP (Patient Assistance Program) Introduction, the price is still conditional.

Principle of Law Followed:

Through Chapter 16 of the Patent Act, 1970 the concept of compulsory licensing is prevalent  by order of the Controller. As per S. 84, it may be noted that after expiry of 3 years, any person may apply to the Controller for taking over the license of the original patentee by providing valid grounds for the same. The conditions stated are-

  • Public requirement is not reasonably met
  • No affordability to the common public
  • Patent is not applicable or worked in territory of India

Merits of Order (after Adjudication of Factual Issues and Analysis)

The Bombay High Court analysed and held the case in Respondent’s favour on the following touchstones-

  • Natco did make efforts to obtain a voluntary licence. So, the onus is on the Petitioner for not having granted the same.
  • Natco has provided for more than 4686 packets as opposed to mere 593 boxes by the Petitioner and so, the reasonable requirements of the public have not been met with by Bayer Corporation.
  • ‘Adequate extent’ is an important term in the arena of pharmaceuticals and so, the fullest extent would ensure that medicines would be made accessible to all, vide Doha Declaration, 2001.
  • If considered in the angle of ordinary course of the drug, the patented drug is not made available at a lower and a reasonable rate. The blanket of ‘differential pricing’ adopted by the Petitioner does not justify the pricing strategy.

The Writ Petition filed by Bayer Corporation in the Bombay High Court was effectively dismissed and though the Petitioner filed a Special Leave Petition before the Hon’ble Supreme Court, the Court refused to interfere in the High Court order and dismissed the petition[3].


[1] For the complete and detailed reading of the case, see < https://www.globalhealthrights.org/wp-content/uploads/2015/11/Natco-v-Bayer.pdf >. last accessed on 01 Oct 2020

[2] Petitioner’s Arguments concised in < https://enhelion.com/blogs/2019/06/05/case-study-on-bayer-corporation-v-union-of-india/#:~:text=Union%20Of%20India,-By%20ashwin&text=The%20writ%20petitioner%20in%20the%20case%20was%20Bayer%20Corporation.&text=Bayer%20filed%20the%20petition%20seeking,distribute%20its%20drug%20’Soranib‘ >. Last accessed on 02 Oct 2020

[3] SLP(C) No. 30145 of 2014- Order dated 12 Dec 2014 before the Hon’ble Supreme Court

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