BAYER CORPORATION VS. UNION OF INDIA AND OTHERS, 2013

This article is written by TAHITI CHATTERJEE, student of PRESIDENCY UNIVERSITY, BLR, intern at LE DROIT INDIA.

INTRODUCTION

The case of Bayer Corporation Vs. Union of India and Others involved the Indian Intellectual Property Appellate Board (IPAB) upholding the decision to grant India’s first compulsory license for the cancer drug Sorafenib (Nexavar). The IPAB found that Bayer had not met the reasonable requirements of the public, as the drug was neither accessible nor affordable. The ruling emphasized that the patentee must make the benefits of patented inventions available at reasonable prices, balancing public health interests with patent rights. Following the IPAB’s decision, the Bombay High Court confirmed the findings, and the Supreme Court of India dismissed Bayer’s appeal, reinforcing the importance of compulsory licensing in ensuring public access to essential medicines.

FACTS

Bayer Corporation patented Sorafenib, a drug used for treating liver and kidney cancer, in India. The drug was marketed under the brand name Nexavar, priced at approximately 280,438 INR per month. In contrast, the Indian generic manufacturer CIPLA offered a generic version, Soranib, for about 27,960 INR. Amid ongoing legal disputes with CIPLA, Natco Pharma sought a compulsory license to produce Sorafenib, arguing that Bayer’s pricing and availability did not meet public needs. The Controller of Patents granted the license, stating Bayer failed to satisfy the requirements of the Indian Patent Act. Bayer appealed this decision, leading to the IPAB’s ruling that upheld the compulsory license, allowing Natco to produce the drug at a lower cost while increasing Bayer’s royalty from 6% to 7% of profits.

LEGAL ISSUES

1. Whether Bayer adequately met the reasonable requirements of the public for the patented drug Sorafenib.
2. Whether the pricing of Nexavar was considered affordable for the average patient in India.
3. Whether Bayer was actively working the patent in India as required by the Patents Act.
4. Whether the Controller of Patents followed proper procedures in granting the compulsory license to Natco Pharma.
5. Whether the grounds for granting a compulsory license were satisfied based on the evidence provided.
6. Whether the decision to grant a compulsory license would set a precedent affecting future patent rights and public health considerations.

CONTENTIONS OF BAYER CORPORATION

Bayer Corporation contended that it had fulfilled its obligations under the Patents Act by making the patented drug Nexavar available in India, albeit at a high price. Bayer argued that the pricing reflected the research and development costs associated with bringing the drug to market. The company claimed that the presence of CIPLA in the market, selling a generic version, indicated that the reasonable requirements of the public were being met. Bayer also asserted that Natco Pharma’s request for a compulsory license was not valid, as it had not properly sought a voluntary license before applying for the compulsory one, which is a prerequisite under Section 84 of the Patents Act. Furthermore, Bayer maintained that it had not failed to share technical knowledge with potential licensees, as it was not obligated to do so without a formal licensing agreement in place.

CONTENTIONS OF NATCO PHARMA

Natco Pharma contended that Bayer had not satisfied the reasonable requirements of the public regarding the availability and affordability of Nexavar. Natco highlighted that Bayer’s pricing made the drug inaccessible to many patients who needed it for cancer treatment. The company argued that the high cost of Nexavar was a significant barrier to access, and thus, a compulsory license was necessary to allow Natco to produce a more affordable generic version. Natco also claimed that Bayer had not adequately worked the patent in India, as evidenced by the limited availability of the drug. Additionally, Natco maintained that it had made a good faith effort to negotiate a voluntary license with Bayer, which was rejected, thereby justifying its application for a compulsory license under the provisions of the Patents Act.

JUDGMENT

The Intellectual Property Appellate Board (IPAB) delivered its judgment on March 4, 2013, upholding the Controller of Patents’ decision to grant India’s first compulsory license for the drug Sorafenib, marketed by Bayer as Nexavar. The IPAB affirmed that Bayer had not adequately met the reasonable requirements of the public, nor had it made the drug available at an affordable price. The Board emphasized that the patentee has an obligation to ensure that the patented invention is worked in India and made accessible to the public.

The IPAB clarified that the term “patented invention” under Section 84 of the Patents Act refers to inventions that must be made available to the public, satisfy public needs, and be worked within the territory of India. It noted that Bayer’s high pricing and limited availability of Nexavar did not fulfill these criteria.

While the IPAB acknowledged Bayer’s rights as a patentee, it stressed that the public interest must take precedence, particularly in matters of health. Consequently, the IPAB allowed Bayer’s appeal to the extent that the royalty rate for the compulsory license was increased from 6% to 7% of the profits made by Natco Pharma. The judgment underscored the balance between patent rights and public health, setting a significant precedent for future cases involving compulsory licensing in India.

AFTERMATH

The aftermath of the Bayer v. Natco Pharma case had significant implications for the landscape of patent law and public health in India. Following the IPAB’s decision to grant the compulsory license for Sorafenib, several key developments occurred:

1. Confirmation by Higher Courts: On July 15, 2014, the Bombay High Court upheld the findings of the IPAB, reinforcing the legitimacy of the compulsory license granted to Natco Pharma. Bayer’s subsequent special leave petition to the Supreme Court of India was dismissed, further solidifying the precedent set by the IPAB’s ruling.
2. Impact on Compulsory Licensing: The case marked a turning point in the application of compulsory licensing in India. It demonstrated that the Indian legal framework could be utilized to prioritize public health over patent rights, encouraging other generic manufacturers to explore similar avenues for obtaining compulsory licenses for essential medicines.
3. Subsequent Applications: Following the landmark ruling, there were several applications for compulsory licenses filed by other companies. However, despite the precedent established by the Bayer case, the Controller of Patents rejected a subsequent application by BDR Pharma for a compulsory license on Dasatinib, citing a lack of a prima facie case and failure to seek a voluntary license first. This indicated that while the Bayer case opened doors for compulsory licensing, each application would still be scrutinized on its individual merits.
4. Public Health Advocacy: The case galvanized public health advocates and organizations, highlighting the need for affordable access to medicines in India and other developing countries. It underscored the importance of balancing intellectual property rights with the urgent health needs of populations, particularly in the context of life-threatening diseases like cancer.
5. Global Implications: The ruling attracted international attention and sparked discussions about the role of patent law in public health. It served as a reference point for other countries grappling with similar issues of access to medicines and the enforcement of patent rights, influencing global conversations about the TRIPS Agreement and its implications for public health.
6. Ongoing Challenges: Despite the positive outcomes of the Bayer case, challenges remain in the realm of compulsory licensing. The reluctance of some companies to grant voluntary licenses and the complexities involved in navigating the patent system continue to pose barriers to access for essential medicines.

In summary, the aftermath of the Bayer v. Natco Pharma case not only reshaped the landscape of patent law in India but also had broader implications for public health policy and access to medicines globally. The case remains a significant reference point in discussions about the intersection of intellectual property rights and public health needs.

ANALYSIS

The Bayer v. Natco Pharma case represents a landmark decision in the realm of patent law and public health in India. The IPAB’s ruling underscores the critical balance between the rights of patent holders and the need for public access to essential medicines. By granting a compulsory license for Sorafenib, the IPAB recognized the pressing need for affordable cancer treatment in a country where many patients cannot afford high-priced medications.

The decision also highlights the importance of the obligations imposed on patentees under the Indian Patent Act. The IPAB’s interpretation of Section 84 emphasizes that patent holders must actively work their patents and ensure that their inventions are accessible and affordable to the public. This ruling sets a precedent that could influence future cases, encouraging more generic manufacturers to seek compulsory licenses when they believe that public health needs are not being met.

Furthermore, the case illustrates the complexities involved in the intersection of intellectual property rights and public health. The IPAB’s decision reflects a growing recognition of the need for flexibility in patent law to address public health crises, particularly in developing countries where access to life-saving medications is often limited by high costs.

CONCLUSION

In conclusion, the Bayer v. Natco Pharma case is a pivotal moment in the evolution of patent law in India, particularly concerning compulsory licensing. The IPAB’s ruling affirms the principle that patents should serve the public interest, especially in the healthcare sector. By allowing Natco Pharma to produce a generic version of Sorafenib, the IPAB not only facilitated greater access to essential cancer treatment but also reinforced the notion that patent rights must be balanced with the needs of society.

This case sets a significant precedent for future compulsory licensing applications, signaling to patent holders that they must actively engage in making their inventions available to the public at reasonable prices. The decision is a testament to the potential of patent law to adapt to the needs of public health, ensuring that life-saving medications are accessible to those who need them most.