Bayer Corporation and Ors. v. Union of India (UOI) and Ors.

Bayer Corporation and Ors. v. Union of India (UOI) and Ors.

Writ Petition No. 7833/2008 before the Hon’ble High Court of Delhi

Decided on: 18.08.2009

The Petitioners filed a writ petition seeking directions to, inter alia, restrain grant of drug license in regard to an application by the third Respondent (Cipla) for the license to manufacture, sell and distribute it’s drug “Soranib”.

As per the Petitioners the proposed drug of the Respondent No. 3 was an imitation and a substitute for their patented drug sorafenib tosylate and as the Petitioners had a patent for the same the Respondent No. 3 should not be given a marketing approval in respect of the same. The Petitioners relied on Sections 2[1] and 17B[2] of the Drugs and Cosmetics Act, 1940 (hereinafter referred to as ‘DCA’) as well as Sections 43, 48 and 53 of the Patents Act, 1970.

Petitioners’  Contentions: 

• Section 2 of the DCA makes it clear that the provisions of the DCA are in addition to and not in derogation to the laws in force which includes the Patents Act. Therefore, Section 2 of the DCA read with Section 48 of the Patents Act, 1970 provides for ‘patent linkage’.
• As per Section 17B(b) of the DCA, the drug of the Respondent No. 3 is a spurious drug and should not be granted marketing approval.
• Form 44 of the Drugs and Cosmetics Rules, 1945 (hereinafter referred to as ‘DCR’) requires mention of the Patent Status of the drug of the applicant. Therefore, it would be well within the knowledge of the rugs Controller that there was a subject patent in relation to the drug and consequently, approval should not be granted.
• Section 156 of the Patents Act, 1970 provides that a patent granted would have the same effect on the Govt. as on others. Thus, authorities under DCA would be bound by the Patent granted to Petitioners.

Respondent’s Contentions (Cipla):

• Approval by Drug Controller cannot amount to Patent Infringement.
• The existence of patent infringement cannot be assumed merely because the patentee states so, but has to be clearly established. Such an assessment is beyond the statutory powers of the DCGI, which is institutionally incapable of dealing with complex issues of patent scope, validity and infringement.
• Section 107A of the Patents Act, 1970 clearly exempts from patent infringement any of acts of making, using or even selling a patented invention, in so far as such acts are necessary to obtain information for the filing of a drug regulatory application before the DCGI. The aim of this section is to ensure that generic drugs are introduced into the market as soon as the patent expires or is invalidated, so that consumers may benefit from this early entry of affordably priced drugs.
• In absence of a specific statutory provision authorizing it to do so, an institutionally incompetent authority such as the DCGI cannot assess the possibility of patent infringement and deny drug regulatory approval on such ground.
• The terms “limitation” and “substitute” in Section 17B(b) cannot be read in isolation to the remainder of the sub-clause. The words “substitute for” are to be read along with “another drug in a manner likely to deceive”. The text of the said sub clause reveals that the same covers a situation where an individual is passing off his drug as that of another by way of using deceptive marks get-up or packaging. By no stretch of imagination can this include patents.
• Under the Patents Act, 1970 except for a violation which falls in Chapter 20, infringement of a patent is not considered a criminal offence. On the other hand, under the DCA, violation of any of its provisions constitutes a criminal offence. If patent linkage is directed, an act of infringement which is not an offence would indirectly be alleged to be an offence.
• If the Petitioners’ contentions were to be accepted, the powers of High courts would be vested with the Drug Controller who will examine the merits of a patent while granting a drug approval, a situation beyond contemplation of the legislature. The jurisdiction of the High Courts to hear infringement actions cannot be indirectly shifted to the office of Drug Controller General of India, who neither has the expertise nor the competence to deal with patent related issues, just as the patent office does not possess the expertise or competence to grant a drug marketing approval in respect of a pharmaceutical preparation.
• The Petitioners are seeking an additional level of protection.

Submissions of Union of India:

• Patents Act is a self-contained code of all issues respecting to patents, their grants and enforcement, setting out the limited rights of the patentee to prevent others from the act of making, using, offering for sale, selling or importing the patented product.
• Patent rights are private rights. Therefore, the State – the DCGI in this instance – cannot enforce the private rights of a patentee. The DCGI is not the appropriate forum to enforce a patent.
• DCA too is a self contained code with respect to matters pertaining to import, manufacture, sale and distribution of drugs and cosmetics.
• If an attempt is made to link the requirement of information relating patent status to marketing, it would be ultra vires the Patents Act, 1970 as well as the Rules.
• The DCGI lacks institutional expertise to deal with complex patent issues.
• Indian statutory law does not permit the linking of the patent status of a drug to its marketing approval.
• There is no administrative or regulatory scheme in India permitting the system of patent linkages.

ISSUES

(1) Whether a combined reading of the DCA and the Patents Act, 1970 leads to the conclusion that no marketing approval can be granted to applicants for drugs or formulations, of which others are patent owners, by reason of Section 2 of the DCA read with Sections 48 and 156 of the Patents Act, 1970; and

(2) Whether drugs or formulations which infringe patents are “spurious drugs” under the DCA.

ISSUE 1

Issue 1 was answered in favour of the Respondents. The Hon’ble Court studied the schemes of the two acts and their respective purpose and stated that a plain juxtaposition of the two acts highlights distinct objectives. The DCA is a public regulatory measure, prescribing standards of safety and good manufacture. The Patents Act, 1970 on the other hand, puts in place a regime containing standards for conferring private monopoly rights in favour of inventors. The officers under the Patents Act, 1970 are experts at judging whether claimed products or processes are patentable and therefore require certain amount of expertise. Such expertise does not exist in the case of officials under the DCA who are required to test the safety of the product, and ensure that it conforms to the therapeutic claim put forward.

The presence of statutory recognition of the system of Patent linkage in China and USA reinforces the fact that the Courts in the absence of a Parliamentary regime, should not tread into the domain of policy making.

Section 156 is a clarification, that even the Govt. cannot infringe the rights of a Patentee.

The argument of Section 2 of the DCA cannot be accepted, as the non-derogation contemplated under the same cannot subordinate an entire legislative scheme set up under the Patents Act. This aspect assumes importance, because the latter enactment was amended in 2005. Parliament never expressed any intention, significantly, to place patent superintendence, or policing powers, with Drug agencies. The amendments show that Parliament was alive to pharmaceutical patents and made significant policy choices through these amendments. If the court were to establish patent linkage, desired by Bayer, it would not only be making a policy choice, avoided by Parliament, but overstepping its obvious interpretive bounds.

If the plea of the Petitioners is accepted then various provisions of the Patents Act, 1970 would be rendered useless. Those which particularly relate to patent policing, such as enforcement of patent standards, in the context of infringement complaints such as post grant oppositions, challenges before the Intellectual Property Board and suits in the High Court. Before each such body, the patentee has to establish and prove infringement, wherever alleged, and may, in some cases, face challenges to the grant of its patent. Such crucial provisions, conceived in public interest, would be rendered a dead letter, if the Drugs authorities, on a representation of the patentee were to refuse licenses or approval, to applicants who otherwise satisfy the requirement of the DCA and its provisions, or even be precluded from examining such applications, on assumed infringement.

ISSUE 2

Issue 2 was also answered in favour of the Respondents. The Court held that if Petitioners’ contention were to prevail every generic drug would ipso facto amount to a “spurious drug”, since they are deemed substitutes of originator (patented) drugs. Such interpretation is facially untenable and contrary to the intent of the DCA. The key elements of “spuriousness” are deception, in the manner of presentation of the drug concerned, in the sense that they imitate or represent themselves to be something that they are not.

A declaration by the drug agency entrusted with the task of deciding applications seeking marketing approval that someone not holding a patent is attempting to get clearance for a “spurious drug” would be pre-emptive, and would negate the provisions requiring that enforcers should follow certain mandatory procedures, and prosecute potential offenders. Such a declaration would be startlingly preclusive, even drastic, whether given by the Drug Controller, or this Court.

The Petition was dismissed with the cost of Rs. 6.75 lakhs imposed on the Petitioners.

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