Bayer Vs Union of India-- Compulsory License Vs Voluntary License - Publ...

BAYER Vs Union Of India  – Whether Compulsory Patent Licence can be
Issued to an Indian Manufacturer against the Patented Product in the Public
Interest?

Introduction

 For the first time,
after India becomes signatory to TRIPS the issue of compulsory licensing had
tabled before the concerned authorities for consideration in the case of Bayer
Corporation v Union of India. This was the first case where compulsory license was
issued under Section 84 of Patents Act, 1970.

Facts of the Case

Petitioner Bayer Corporation was granted a subject patent by
India’s Patent Office on 3rd March 2008 for their drug “Sorafenib Tosylate”that
is sold in market under the name of Nexavar. The drug is used in the treatment
of liver and kidney cancer. The Indian drug making company Natco approached the
petitioner Bayer Corporation for grant of voluntary license to produce and sell
the drug in India under its brand name at a price of Rs. 10,000 per month as
against the expensive price of Rs. 2,80,428 per month that was charged by
petitioner. Petitioner rejected the Natco’s application for grant of voluntary
license of their drug Nexavar.

To Grant a Compulsory Licence

The patented drug can be manufactured and sold by the third
party if the patent holder has granted permission for it.  After the denial of voluntary license Natco
lodge an application under Section 84(1) of the Patents Act, 1970 to the
Controller general of patent to get a compulsory license to manufacture and
sell the Nexavar in India.

Finally, on 9th March, 2012 Controller granted a
non-exclusive, non-assignable compulsory license to Natco to manufacture and
sell the patented drug at a price of Rs. 8,800 and also directed them to pay
the royalty 6% of its net sales to petitioner Bayer till the time of patent.

Bayer Appeal Against IPAB Order

Aggrieved by it, Bayer appealed against the order of
compulsory license in 2013 in IPAB intellectual property appellate board
contending that the order passed was in contravention with the Patents Act,
1970. Board rejected the contention of Bayer and upheld the of Controller
general of patents. Finally, Bayer challenged both the orders of 2012 and 2013
passed by the Controller general of patent and by the IPAB , on the issue of
granting a compulsory license to the Natco in the Bombay High court.

Issues of the case

1] Whether the Compulsory license granted by controller is in
accordance with the provision of Patents Act?

2] Did the respondent Natco make efforts to obtain voluntary
license from patent holder Bayer Corporation?

Rules applied

1]Section 83: General Principle applicable to working of
patented inventions

2] Section 84: Compulsory license

Analysis

The fundamental objective behind the Patent Rights is to
safeguard the interest of inventor with respect to public interest. In the case
at hand the personal right were superseding in the name of Patents right as
patent holder were selling drugs at a much higher price.

The main issue in the case at hand is about the issuance of
compulsory licensing. In granting the compulsory license all the requirements
under the provisions of Patent Act were fulfilled by the Controller general of
Patent for granting the compulsory license to Natco. The provisions which were
analysed by the court is clause (a), (b) and (c) of Section 84(1)[9] of the
Patents Act, 1970 for granting compulsory license.

Compulsory Licensing

The conditions for granting the compulsory licensing is
fulfilled and the Natco’s application for compulsory licensing mentioned the
issues on which the petitioner were lacking i.e. the drug was not satisfying
the reasonable requirement of public with regard to its various factors, the
drug was not working in the territory of India here it means the drug must be
manufactured to a reasonable extent in India comprising the R&D also,on
this point the court took into instance the meaning of words ‘worked in the
territory of India’, Section 83(f) of the Patent Act states that there should
not be abuse of patent by patent holder in International trade.

Whether there is a Lacunae in the
Judgement ?

The patent holder were abusing his patent rights by charging
too much for medicine but they also contended about R&D cost what about
that, this might be a lacunae in judgment but it does not provide a strong
contention to claim that judgement is not right .

High Court observed that the Articles
from TRIPS agreement were not completely taken into consideration and they were
superseded by the legal framework of country and court interpreted the Articles
of TRIPS in literal sense and not in purposive one, but here also court took a
note on Article 31 of TRIPS. Under the TRIPS Agreement, governments can make
limited exceptions to patent rights, provided certain conditions are met.The
decision by court is a win for Natco and a slight disadvantageous to Barley
corporation

Conclusion

The court accurately and rightly dismissed the petition. The
judgement clarified once again that no matter what the subject matter is, the
public interest is at the top most priority, the issue in the case was
affecting the public at large. Objective behind incorporation of Patent Act is
to promote the innovation, to safeguard the credit of inventor and to prevent
them from any damage or infringement of their patent. But it can’t be misused
by the patent holders as the main aim behind all the legal framework related to
IPR is the mutual benefit for both the public and inventor also.

The case at hand presented us a situation where personal
interest were dominating over public interest just for earning profit on the
patent that was invented by the patent holder, but court clarify that no one
can misuse the rights of patent and the greater good will always prevails over
the profiteering motive. Hence the case petition of Barley Corp. dismissed and
the court upheld the earlier decision of IPAB.

Learning from the Case

1.  For the Patented Drug Product , an
Indian manufacturer can approach the patent holder for the issue of Voluntary
License.

2.  On refusal , the Indian Manufacturer
can approach the Patent Authorities to issue Compulsory License in the public
interest- mainly at affordable cost.

3. High Court observed that the
Articles from TRIPS agreement were not completely taken into consideration and
they were superseded by the legal framework of country and court interpreted
the Articles of TRIPS in literal sense and not in purposive one, but here also
court took a note on Article 31of TRIPS.