This article has been written by Ms. AGRATA CHATURVEDI a 1ST year student of LLOYD LAW COLLEGE , Greater Noida

Introduction:

Intellectual property is a form of intangible property, while a Patent is part of intellectual property rights. The granting of a patent gives the inventor of an invention the right under state law to prevent others from making, using or selling his invention for a limited period of 20 years. The two-judge judgment  of the Hon’ble Supreme Court of India in  Novartis AG V. Union of India (Union of India) is one of the most important judgments in India. In that case, Novartis challenged IPAB’s patent application  for beta-crystalline “imatinib mesylate.” while the Supreme Court of India rejected such a challenge on the ground that the said drug did not provide better or better therapeutic efficacy as compared to the known substance ie. imatinib mesylate and quorum; means that the said medicine did not contain the invention. One of the biggest reasons for  the rejection of Novartis’ patent application  was to avoid making already patented products greener forever by making small changes.

Facts:

In 1998, one of the largest international pharmaceutical companies, namely Novartis International AG, submitted an application under the TRIPS agreement with the Indian Patent Office in Chennai to grant  a patent for the anti-cancer drug and Glivec used to treat chronic myelogenous leukemia (CML) and gastrointestinal stromal tumors (GIST) developed by imatinib mesylate and the beta-crystalline form of imatinib mesylate. This drug is widely used in the treatment of cancer and  is patented in more than 35 countries.  When Novartis applied for the patent, the grant in India under Section 5 of the Patents Act, 1970 was limited to methods or processes and not to products. Section 5 of  the Patents (Amendment) Act 2005  was repealed. patents began to be granted for methods or processes, but also for products.  In 2005, Novartis’ patent application  for  Glivec was considered and  rejected by the Madras Patent Office on the grounds that the drug was predictable based on previous publication and did not meet the requirements of novelty and non-obviousness. the claimed invention is not patentable under section 3 (d) of the Patents Act, 1970, because the therapeutic efficacy of the said medicine has not changed appreciably compared to its existing form, ie. Zimmermann’s patent. Later, in 2006, Novartis filed two petitions in the Madras High Court under Article 226 of the Constitution of India. Section 3(d) of the Patents Act, 1970 was later found in appeals to be unconstitutional with the TRIPS Agreement and also in violation of Article 14 of the Constitution of India and another order of the Madras Patent Office. The Madras Court of Appeal referred the case to the Intellectual Property Appellate Tribunal (IPAB) in 2007. The IPAB finally heard the appeal and dismissed it, stating that the invention met the test of novelty and non-obviousness, but that  the patentability of the product suffered Under section 3 (d) of the Patents Act 1970.  IPAB is determined to prevent an already patented product from going green by making minor changes and providing easy access to life-saving medicines to Indian citizens. Later, in 2009, Novartis filed a Special Leave Petition (SLP) in  the Supreme Court of India against the IPAB order  under Article 136 of the Constitution of India.

Issue:

1. According to the provision of section-3(d) of Patent Act, 1970 what is a known substance?
2. According to section-3(d) of Patent Act, 1970 what is the meaning of Efficacy?
3. According to section-3(d) of Patent Act, 1970 whether increase in bioavailability qualify as increase in therapeutic efficacy?
4. Whether the invention “Beta crystalline form of imatinib mesylate” claimed by Novartis is more efficacious than the substance that it was derived from i.e. “Imatinib mesylate”? 

Judgment:

In 1998, one of the largest multinational pharmaceutical companies,  Novartis International AG, filed a TRIPS application  with the Indian Patent Office in Chennai to grant a patent for Glivec, a cancer drug  used to treat chronic myeloid leukemia (CML). ) and gastrointestinal stromal tumors (GIST) developed with imatinib mesylate and  imatinib mesylate beta crystal form. This drug is widely used in the treatment of cancer and is patented in more than 35 countries. When Novartis applied for a patent, the grant in India under Section 5 of the Patents Act, 1970 was limited to methods or processes, not  products. Section 5 of the Patents (Amendment) Act 2005 was repealed. patents began to be granted for methods or processes, but also for products. In 2005, Novartis The Madras Patent Office heard and rejected Glivec’s patent application because the drug was predictable based on previous publication and did not meet the requirements of novelty and non-obviousness. the claimed invention is not patentable under Section 3 (d) of the Patents Act of 1970 because the therapeutic efficacy of the said medicine has not been sufficiently changed as compared to its existing form, ie, Zimmermannand#039; patent Later, in 2006, Novartis filed two petitions in the Madras High Court under Article 226 of the Constitution of India. Section 3(d) of the Patents Act, 1970 was later held to be unconstitutional under the TRIPS Agreement and also under Article 14 of the Constitution of India and another  Madras Patent Office order. The Madras Court of Appeal referred the case to the Intellectual Property Appellate Tribunal (IPAB) in 2007. The IPAB ultimately heard  and dismissed the appeal, finding that the invention met the criteria of novelty and non-obviousness, but  suffered from Section 3 patentability. (d) of the Patents Act 1970. IPAB is determined to prevent an already patented product from going green by making small changes and providing easy access to life-saving medicines to Indian citizens. Later in 2009, Novartis filed a Special Leave Petition (SLP) in the Supreme Court of India against the IPAB order under Article 136 of the Constitution of India.

Conclusion:

The decision of the Hon’ble Supreme Court is to prevent the continued greening of patented products and to provide relief to those who cannot afford life-saving drugs, because these pharmaceutical companies sell such life-saving drugs at  very high prices. therefore ordinary people cannot afford it. In its judgement, the  Supreme Court  made it clear that India is a developing country and access to cheaper medicines  is essential to the lives of billions of people. Section 3(d) of the Patent Act of 1970 prevents these large pharmaceutical companies from obtaining a secondary patent by making minor changes to existing technology. Novartis did not prove that “Imatinib mesylate and quot;beta crystal form; is more comparable to the therapeutic efficacy of “imatinib mesylate”. The Supreme Court rejected Novartis’ patent application

Bayer Corporation vs Natco Pharma Ltd :

Introduction

Bayer Corporation v Natco Pharma Ltd (2013) is a landmark case in the Indian pharmaceutical industry’s long-running disputes over compulsory licensing. Compulsory licensing is treated as a government license of a patented medicine to a third party  without the consent of the patent holder. Bayer Corporation is a global pharmaceutical company that produces aspirin drugs. Natco Pharma, on the other hand, is an Indian pharmaceutical company that manufactures and produces cheap and affordable medicines. The cause of the dispute between the  companies was a drug called Nexavar “Sorafenib tosylate”, which is used to treat kidney cancer. This case discusses Natco Pharma’s appeal to the Intellectual Property Appellate Board (IPAB) against the compulsory licensing of the drug Nexavar by Bayer Corporation, and after many subsequent lawsuits. , India’s first compulsory license was granted to Natco pharma. This article provides a case study of this important decision.

Bayer Corporation vs Natco Pharma (2013)

Bayer Corporation vs Natco Pharma (2013) was the first case in India where Natco Pharma was granted a compulsory license for a kidney cancer drug called ‘Nexavar’. Natco’s application for a compulsory license for Nexavar was filed with the Registrar of Patents in 2011 under Section 84(1) of the Indian Patents Act, 1970. The decision of March 9, 2012 was in Natco’s favor. the license was granted and  Bayer  appealed to the IPAB. Bayer requested a postponement of the decision of the controller, but it was rejected because the  decision  of the IPAB was in line with the decision of the controller.

Brief facts of the case 

Following the grant of the compulsory licence, Natco was directed by the Controller to manufacture and sell the patented drug thereby paying a royalty at 6% of its net sales of the patented drug under its brand name, to the original patent holder. The drug was allowed to be sold at a price of Rs.8800/- for 120 tablets for a month-long treatment. The grant of compulsory licence to Natco was considered to be non-exclusive, non-assignable and for the balance term of the patent. Being aggrieved to the afore-mentioned order, the appeal was sought by Bayer before the IPAB who on 4 March 2013 had upheld the order dated 9 March 2012 of the Controller thereby granting the compulsory licence to Natco. The only difference that was noticed in the judgement was a rise in the royalty payable by Natco to the petitioner (6 to 7% of the sales of the patented drug), under its brand name. The timeline of events that have taken place concerning this case has been provided hereunder: 

1. 1990: A drug named Sorafenib Tosylate was invented by Bayer Corporation.
2. 1999: A patent application was made by Bayer in the United States.
3. 2000: Bayer filed a PCT International Application (Patent Cooperation Treaty).
4. 2005: Bayer had launched the drug (Gleevec) and was selling it under the name “Nexavar”.
5. 2008 (March): Patent was granted to Gleevec in India to Bayer.
6. 2010: The generic version of the drug was being sold by another drug manufacturer, M/S Cipla.
7. 2011 (July): Natco had then applied for a compulsory licence before the Controller of Patents to manufacture and sell a generic version of Nexavar in accordance with Section 84(1) of the Indian Patent Act, 1970 (amended in 2005).
8. 2012 (March): Natco was granted the first compulsory licence in India thereby initiating the sale of a generic version of Nexavar.
9. 2012: Further, in the same year, Bayer had appealed against the decision of the Controller, before the IPAB, which further went before the Bombay High Court with the contention that the order delivered stands in detriment to the international patent system thereby being responsible for endangering research work.

Issue of the case

The issue in this case was whether to grant a compulsory license to the manufacturer of a generic drug, even though it is already patented and used by a registered user. The issue raised many big questions in the pharmaceutical industry, as discussed below. 1. Did Bayer Corporation fail to meet the public’s reasonable demands for the drug?  2. Was Nexavar available to the public at a reasonable price that made it available? As we  understood earlier, the concept of a compulsory license was given a green light in the TRIPS agreement, which is an international agreement that forms a uniform set of rules for intellectual property rights. The granting of a compulsory license is a sign of an exception to the TRIPS Agreement. Under the Indian patent laws, the provisions relating to compulsory license range from sections 84, 86, 89 to 93. This provision is designed to help the government improve the availability of the invention used by the patentee. A compulsory license also helps to limit abuse of the monopoly rights that a patent holder receives when he receives a registration of an invention.

Contentions of the parties 

The arguments that were extended by the petitioner and the respondent, have been provided hereunder.

Arguments submitted by the petitioner 

Natco Pharma argued that Bayer was failing in its arguments under Section 84 (b) of the Indian Patent Act,1970. This was because the company was offering the drug at an unaffordable high price to the public thereby restraining access to the same. Natco Pharma was of the opinion that if they are granted a compulsory licences, they can resolve the issue of accessibility and affordability when it comes to public need and welfare in terms of medicines. 

Arguments submitted by the respondent 

The argument from the side of Bayer corporation was that they believed that this whole trend of issuing compulsory licences violates Section 83 of the Indian Patents Act,1970 as it degrades research and development. They not only believe this to be against the nature of businesses but they also believed it to be against many international treaties as it violated Article 27.1 of the TRIPS agreement of which India is also a part. Another prime contention raised by the respondent was a restriction in the process of research and development that will be initiated if a compulsory licence is given its way. 

Judgement of the case

Ratio Decidendi – “The court ‘held’”

The final judgement of the controller of the patents was to grant a compulsory licence to Natco Pharma for the drug “Nexavar”. The controller gave his judgement under Section 84 of the Patents Act of 1970 because Bayer wasn’t able to meet any of the requirements of the section. 

1. The first requirement given in Section 84 (1)(a) was not being fulfilled as the reasonable requirements of the public were not being fulfilled with regard to this drug.
2. The second requirement given in Section 84(1)(b) was the main issue as the price of the drug was unaffordable by the majority of the public and this is a big issue to address as in India the biggest problem is of affordability as only a very minor percentage of the population is actually privileged to afford these costly medicines and benefit from them while the majority of them cannot. 
3. The third requirement given in Section 84(1)(b) that wasn’t fulfilled was that the patented invention shall be worked in the territory of india.

Also, the controller rested heavy weight on Article 5(A)(2) of the Paris Convention to justify his reasoning i.e each country has the right to grant a compulsory licence to benefit the general public. There were also many requirements set by the controller which cannot be breached by Natco, for example, the monthly treatment price of the drug should not exceed the limit of Rs.8880/-. Bayer has to pay 7% of the medicines net sale etc. 

Conclusion

There is no doubt that it was an important case and  focused on the well-being of people, but was the problem really solved at the root? Hasn’t it affected India negatively in some way? Wouldn’t that affect  foreign investment in India and complicate the economic situation? These are all the things that were left out of this judgment. Because the main problem was not only to give compulsory licenses to third parties, but to favor the interests of  people and  society in every situation. Let’s say in this case that the license was given to Natco pharma, but  now that doesn’t affect their willingness to spend a ton of money on R&D and create a new drug  to license to another company. Thus, the problem  to be solved here was to find a balance between the people’s well-being and also the economic interests of the state.  After all this, the “Doha Declaration” is highlighted. The goal of the Doha Declaration was to  reform  the international trade system by reducing trade barriers. This incident was what prompted others to apply for compulsory licenses, but so far we have not seen another in this race.

REFERENCES:

1. https://indiankanoon.org/doc/165776436/
2. https://blog.ipleaders.in/analysis-novartis-g-vs-union-india/
3. http://notesforfree.com/2018/01/18/patent-case-brief-novartis-v-union-india/

4.http://nujslawreview.org/wp-content/uploads/2016/12/mansi.pdf.

5.https://www.linkedin.com/pulse/natco-pharma-ltd-vs-bayer-corporation-landmark-case-mukesh-kumar/

6.Du, D. (2013). Novartis AG v. Union of India: Evergreening, Trips, and Enhanced Efficacy under Section 3 (d). J. Intell. Prop. L., 21, 223.