Intellectual Property Rights

Bayer Corporation v. Union of India

Order No. 45/2013, decided 4 March 2013

Citation: Order No. 45/2013, decided 4 March 2013
Court: Intellectual Property Appellate Board
Date: 4 March 2013
Bench: Justice Prabha Sridevan (Chairperson) and D.P.S. Parmar (Technical Member)

Facts

Bayer owned Indian Patent No. 215758 for sorafenib tosylate, sold under the name Nexavar.
The medicine was used for treatment of certain liver and kidney cancers.
Bayer’s monthly treatment price was approximately ₹2.8 lakh.
Natco Pharma applied for a compulsory licence under Section 84 of the Patents Act.
Natco proposed selling its generic version at a substantially lower price.
The Controller granted India’s first compulsory licence on the grounds that:
reasonable requirements of the public were not satisfied;
the medicine was not available at a reasonably affordable price;
the patent was not adequately worked in India.
Natco was required to pay Bayer a royalty of 6%.
Bayer appealed to the Intellectual Property Appellate Board.

Whether Natco had made adequate efforts to obtain a voluntary licence before applying.
Whether the three grounds under Section 84(1) had been established.
Whether supplies made by Cipla, an alleged infringer, could be counted in Bayer’s favour.
Whether importation could amount to working of a patent in India.
Whether the compulsory licence and its terms were justified.

After three years from grant of a patent, a compulsory licence may be granted where any one of the following exists:
reasonable requirements of the public are not satisfied;
the invention is not available at a reasonably affordable price;
the invention is not worked in India.
The grounds are separated by “or”; proving one may be sufficient.
The applicant must ordinarily make genuine efforts to obtain a voluntary licence on reasonable terms.
Affordability is assessed primarily from the perspective of the public needing the medicine.
Importation may potentially constitute working, depending on:
circumstances;
scale of supply;
affordability;
adequacy of availability.
Unauthorised sales by an alleged infringer cannot ordinarily discharge the patentee’s statutory responsibility.

Natco had written to Bayer seeking a voluntary licence and explaining the proposed terms.
Bayer rejected the request.
The Board held that the law did not require Natco to make repeated requests after a clear rejection.
Evidence showed that Bayer had supplied the medicine to only a very small proportion of the patients who required it.
The reasonable requirements of the public were therefore not met.
Bayer’s price placed the treatment beyond the reach of most Indian patients.
Affordability could not be assessed solely by asking whether Bayer considered its price commercially justified.
The relevant question was whether the public could reasonably obtain the drug.
Bayer argued that Cipla’s lower-priced sales should be added to total market availability.
The Board rejected this.
Cipla was not Bayer’s authorised licensee, and its presence was itself the subject of infringement litigation.
A patentee could not rely upon an alleged infringer to fulfil its obligation to make the invention available.
On working, the Board did not hold that local manufacture is invariably mandatory.
Importation could sometimes amount to working.
Bayer’s limited imports, however, did not supply the medicine on an adequate commercial scale at an affordable price.
Its patient-assistance programme was philanthropic and limited; it did not amount to regular commercial working.
Public interest in access to the patented medicine therefore strongly supported the licence.

The IPAB substantially upheld the Controller’s grant of the compulsory licence.
It increased Bayer’s royalty from 6% to 7% of Natco’s net sales.
The Board confirmed that the medicine was insufficiently available, unaffordable and inadequately worked.
Use this case for: a compulsory licence may be granted where a patented medicine is not adequately supplied, reasonably affordable or genuinely worked for the Indian public.