Bayer Corporation v Union of India (2009)

Summary

“The writ petitioner, a pharmaceutical company manufacturing various kinds of drugs,” “seeks directions to, inter alia, restrain grant of drug license in regard to an application by the third Respondent for the license to manufacture, sell and distribute its drug ‘Soranib’. Bayer claims that the said drug is an imitation of, or substitute for its (the first petitioner’s) patented drug.” (para 1) “Bayer contends that Section 2 of the Drugs Act read with Section 48 of the Patents Act, provides the concept of ‘Patents Linkage’.” (para 5) The points for decision were “Whether a combined reading of the Drugs Act and the Patents Act lead 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 Drugs Act, read with Sections 48 and 156 of the Patents Act” and “Whether drugs or formulations which infringe patents are ‘spurious drugs’ under the Drugs Act.” (para 31)

The Court held that “A plain juxtaposition of the two enactments highlights distinct, even disparate objectives” (para 37) and that “patent infringement is never assumed, at the askance of the patentee; it has to be established before a court of law, under the Patents Act.” (para 39) “For the above reasons, it is concluded that Section 2 of the Drugs Act and Section 156 of the Patents Act do not establish the patent linkage, sought for by the petitioner.” (para 48) “For the above reasons, it is held that this court cannot conclude that that unpatented drugs are ‘spurious drugs’.” (para 52) “In view of the above discussion, the writ petition fails; it is dismissed with costs, quantified at Rs. 6,75,000/- payable in equal shares to the Union of India, and Cipla.” (para 54)

What the court decided

1. A right to exclude. “It is not an affirmative right to practice or use the invention; it is a right to exclude others from making, using, importing, or selling patented invention, during its term. They are property rights granted by states, to inventors in exchange with their covenant to share its details with the public.” (para 32) “What is granted is not the right to make, use, offer for sale, sell or import, but the right to exclude others from making, using, offering for sale, selling or importing the invention.” (paras 32, 35)
2. Patents and other intellectual property. “In the case of patents, however, the property owner does not, in the absence of a grant, (of patent) possess any right to prevent a rival from producing the same goods or products. Patents, unlike other intellectual property rights, are susceptible to challenge, at the ‘pre-grant’ stage; later, at the ‘post-grant’ stage; they can be questioned in proceedings before the Intellectual Property Appellate Board, and also challenged by defendants in suits” “Such multiple challenges to the intellectual property right are absent in the case of copyrights and trademarks.” (para 35)
3. The two enactments compared. “A plain juxtaposition of the two enactments highlights distinct, even disparate objectives. The Drugs Act is a public regulatory measure, prescribing standards of safety and good manufacture practices” (para 37) “Whether it involves an inventive step, or is novel, is not within the domain of the Drugs Act authorities and officials. To invest these regulatory authorities with functions that are exclusive to other enactments would be beyond intendment of the Drugs Act. Conversely, the authority to police Patent standards is exclusively that of the authorities under the Patent Act” (para 37)
4. No judicial linkage. “The existence of patent linkage standards in express legislation, in other parts of the world” “underscores that courts, in the absence of a Parliament mandated regime, should not blaze into an obviously legislative path.” “It would not be an exaggeration to say that what Bayer wants to achieve is not filling such a gap as much as establishment of an ‘air-link’ where the gulf dividing what is sought for, and what exists on the statute, is of oceanic proportions.” (para 38)
5. Infringement must be adjudicated. “The other problem to accepting Bayer’s contention is that patent infringement is never assumed, at the askance of the patentee; it has to be established before a court of law, under the Patents Act. Such adjudication is unquestionably beyond the Drug agencies’ jurisdiction, or” “charter, under law.” (para 39)
6. Section 156. “Section 156 is a clarification, that the Government, and its officials, as grantors, are bound by the patents. This means that they have to respect patents, and cannot infringe them, (except to the extent it is sanctioned by law). Ascribing anything more than this clear intention, would be to extend the boundaries of the patent standards and broadening the reach of Drug agencies, who cannot apply patent standards, in their legitimate scrutiny.” (para 40)
7. The non-derogation clause. “The ’non derogation’ device, enacted does cannot subordinate an entire legislative scheme set up under the Patents Act.” “Parliament never expressed any intention, significantly, to place patent superintendence, or policing powers, with Drug agencies.” “If the court were to establish or decree a patent linkage, desired by Bayer, it would not only be making a policy choice, avoided by Parliament, but overstepping its obvious interpretive bounds.” (para 41)
8. Provisions reduced to useless lumber. “In the opinion of this court, Bayers’ contentions would precisely achieve what the Supreme Court cautioned against – various provisions of the Patent Act would be reduced to ‘useless lumber’.” “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 Drugs Act and its provisions, or even be precluded from examining such applications, on assumed infringement.” (para 43)
9. The consequences of linkage. “It is also a matter of concern that such patent linkage would have the following undesirable results:” “It clothes regulatory authorities, which are executive bodies solely concerned with scientific quality, efficacy and safety issues, with completely new powers, and into areas lack in expertise, i.e. patent rights policing.” “It transforms patent rights which are private property rights, that depend on the owners’ promptitude and desire to enforce them, into public rights, whose enforcement is dependent on statutory authorities, who are publicly funded.” “Such linkage potentially undermines the ‘Bolar/Early Working’ exception that encourage quick access to the post patent markets for generic medicines.” “As the patent linkage system is not available outside of the pharmaceutical sector, or in the US, even for biologic products, extending it, as is sought, would potentially violate Article 27, without any debate, or mandate of law.” (para 44)
10. Hoechst and Cattle Remedies. “For these reasons, Hoechst is not an authority for mandating a patent linkage, sought in the case.” (para 45) “So far as the decision of the Allahabad High Court in Cattle Remedies is concerned, this court is unable to agree with the conclusions. The court there was not concerned with the interface between the Patents Act and the Drugs Act” (paras 45–46)
11. Form 44 and patent status. “The court finds as insubstantial Bayer’s argument that Rule 122-B(1) (b) of the Drugs Rules, read with Form 44 and the data required (Appendix 1 to Schedule Y) give an insight that patent linkage is intended by Parliament.” “Its omission to establish a patent linkage on the lines of the US Hatch Waxman Act, significantly persuades this court to refrain from mandating it through judicial directive.” (para 47)
12. The conclusion on linkage. “For the above reasons, it is concluded that Section 2 of the Drugs Act and Section 156 of the Patents Act do not establish the patent linkage, sought for by the petitioner.” (para 48)
13. Spurious drugs. “If Bayer’s 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 Drugs Act. 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.” (para 49) “For the above reasons, it is held that this court cannot conclude that that unpatented drugs are ‘spurious drugs’.” (paras 49, 52)
14. A pre-emptive declaration. “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.” (para 51)
15. Procedure. Realistic costs. “This court is constrained to observe that the present litigation was what may be characterized as a speculative foray; an attempt to ’tweak’ public policies through court mandated regimes.” “Even though the writ petition cannot succeed, it would be a travesty of justice if the court does not direct realization of realistic costs, in this case.” (para 53) “In view of the above discussion, the writ petition fails; it is dismissed with costs, quantified at Rs. 6,75,000/- payable in equal shares to the Union of India, and Cipla.” (paras 53–54)

Subsequent treatment

• Appealed — Bayer’s Letters Patent Appeal, LPA 443/2009, was dismissed by a Division Bench of the Delhi High Court on 9 February 2010 in Bayer Corporation v Union of India, which held: “This Court concurs with the learned Single Judge” (para 28), describing “the well reasoned judgment of learned single Judge in which we fully concur.” (para 37) A special leave petition against that judgment was reported dismissed by the Supreme Court on 1 December 2010.
• Followed — In Telefonaktiebolaget LM Ericsson (Publ) v Competition Commission of India (2016) the Delhi High Court reproduced this judgment’s description of patents (para 98) and held that patent rights “are property rights and granted to inventors in exchange of their covenant to share its details with the public” (para 108).
• Followed — In Merck Sharp and Dohme v Glenmark Pharmaceuticals (2015) the Division Bench of the Delhi High Court recorded: “As this Court noted in Bayer Corporation and Ors. v. Cipla, Union of India (UOI) and Ors., 162 (2009) DLT 371” that “such a result would be destructive of the objectives underlying the Patents Act.” (para 85)