System of Patent Linkage in India

This article proposes to analyze the current status of patent linkage in India, in light of the Hon’ble Delhi High Court and Supreme Court’s judgment in the case of Bayer Corporation and Others v Cipla, Union of India (UOI) and Others [1] . At the outset, the article explains the concept of patent linkage and proceeds to throw light on the existing system in United States and the European Union. It further reviews the judicial history of patent linkage in India and the reasons for not permitting the same. The paper concludes with the future of patent linkage in India outlining the pros and cons.

The system of ‘patent linkage’ refers to the practice of linking drug marketing approval to the status of the patent of the originator’s product and not allowing the grant of marketing approval to any third party prior to the expiration of the patent term, unless consented to by the patent owner [2] . For a pharmaceutical drug to be introduced in the market, either by the originator company (i.e a company that invents a new drug, gets a patent, conducts clinical trials, and introduces the drug in the market for the first time), or by generic [3] manufacturers (i.e those producing ‘bio-equivalents’ of the originator’s drugs), it is essential to obtain marketing approval from the drug regulator of their respective countries. The concept of patent linkage essentially requires the generic manufacturer to prove to the drug regulator that the drug, for which he seeks approval, is not covered by a valid patent.

The member countries are required to abide by the provisions of the World Trade Organization Trade Related Intellectual Property Rights Agreement (hereinafter referred as ‘TRIPS’), which under Article 28 ensures exclusive rights to the patent holder for a limited period. Article 28.1 (a) of TRIPS agreement reads as follows:-

“where the subject matter of a patent is a product, to prevent third parties not having the owner’s consent from the acts of: making, using, offering for sale, selling, or imposing for these purposes that product”

Reading Article 28 along with Article 39.3 [4] (which deals with protection of undisclosed information), some member states construe it to introduce the system of patent linkage. But it is not specifically covered under TRIPS. Patent linkage falls under the umbrella of ‘TRIPS Plus’ concept, this principle means that any intellectual property agreement negotiated subsequent to TRIPS among and/or involving WTO members which can only create higher standards.

The TRIPS-plus concept covers both those activities aimed at increasing the level of protection for right holders beyond that which is given in the TRIPS Agreement and those measures aimed at reducing the scope or effectiveness of limitations on rights and exceptions. [5]

Patent linkage in United States

As under the US laws, the Food and Drug Administration (hereinafter referred as ‘FDA’) grants marketing approval for pharmaceutical products [6] . The Hatch-Waxman Amendments to the Federal Food Drug and Cosmetic Act in 1984 statutorily makes provisions for patent linkage. The FDA maintains an ‘Orange Book’ which has a list of approved pharmaceutical drug products with therapeutic equation equivalents [7] . The Act aims to allow speedier introduction of generic competition, increased rights for drug companies to recoup patent terms that had been shortened by clinical trials and regulatory delays, and a linkage system conditionally allowing registration of generic equivalents in the absence of patent claims.

Patent linkage in European Union

The European Union does not support the concept of patent linkage. The European Generic Medicines Association, in a press release, stated that patent linkage was contrary to EU regulatory law as it undermined the Bolar provision which sought to encourage quick access to the post patent market for EU generic medicines. Bolar provision was framed with the mindset of speeding up generic entry into the market so as to provide with the availability of low cost drugs to the consumers [8] . The Bolar provision permits any drug manufacturer to experiment with any patented drug, with a view of generating data that could be submitted to a drug control authority. Patent linkage accordingly was considered to defeat the sole purpose sought to be achieved by the Bolar Provision. The status of a patent application is not a ground for refusal, suspension or revocation of attaining marketing authorization [9] .

Patent linkage in other countries

Countries like China, Canada and Singapore follow the US system and recognize patent linkage. The applicants seeking marketing approval in the aforesaid nations need to prove that the application in no manner whatsoever infringes an existing patent. In fact, Canada has an equivalent of the FDA ‘Orange Book’ with the patents listed therein [10] .

Advantages of Patent Linkage

The advantages of patent linkage are mainly argued by developed nations-

The system reduces wasteful and unnecessary patent infringement litigation as it requires generic drug companies to assess whether their drug is subject to a patent prior to seeking drug marketing approval.

There exists stricter protection of patent holder’s rights. The patent is valid for a period of twenty years and the same continues till its expiry. No marketing approval is sought during that period and hence the patent holder enjoys his right.

Patent linkage also helps in the promotion of innovation in the pharmaceutical sector. During the existence of a patent the others can indulge in research and development activities and, in turn, produce newer and innovative processes. The system increases the efficiency and productivity of the research and development sector.

Disadvantages of Patent Linkage

The disadvantages of patent linkage are mainly argued by developing nations-

The time gap between expiration of patent protection period of a drug and the introduction of its generic equivalent in the market can prove disadvantageous. Patent linkage is known to be against public health interests as it delays the entry of cheap generic medicines into the market and keeps them out of the reach of those who need them.

Another disadvantage is the qualification of the drugs controller. Generally, the Drugs Controller is not well informed about the complex issues related to patent validity.

Grant of marketing approval does not in any manner infringe the patent holder’s rights. The approval sought is only addressing the drug as safe and bestowing upon it the right to carry on clinical trials, so that as soon as a valid patent expires, it is ready to enter the market without any further delay.

In developing countries where government departments are already over burdened with work, it will lead to increased paper work, thereby increasing chances of delay and inefficiency.

Patent linkage in India

The Drugs and Cosmetics Act, 1940, requires the Drug Controller General of India (hereinafter referred to ‘The Drugs Controller’) to grant marketing approval to a pharmaceutical drug being introduced in India. The Drugs Controller needs to primarily look into the safety quotient of the drug, i.e, whether it is safe and fit enough to be introduced in the market and thereafter be consumed by the consumers. The concept of patent linkage makes it essential for the generic manufacturer to prove to the Drugs Controller that the marketing approval seeked for their drug is not covered by a valid patent. ‘Patent Linkage’ has been discussed in the Indian courts time and again. However a recent judgment of the Supreme Court in Bayer Corporation & Anr v. Union of India & Ors [11] puts to rest the debate regarding permissibility of patent linkage in India.

The case that raised the issue of patent linkage in India was that of Bristol-Myers Squibb Co. v. Hetero Drugs Ltd [12] , decided in December 2008 by the Delhi High Court. Bristol-Myers Squibb Co. secured an ex-parte injunction from the Hon’ble Delhi High Court, preventing India’s Drug Controller from approving a generic version of its cancer medicine ‘Dasatinib’ manufactured by Hetero Drugs Ltd. The drug patented by Bristol-Myers in India, was being sold under the brand name ‘Sprycel’, and prescribed for chronic myeloid leukemia. The Delhi High Court put a stay on the application sought by Hetero Drugs Ltd., seeking marketing approval for its drug, for making, selling, distributing or exporting the medicine. The court in its judgment observed: “It is expected that the Drugs Controller while performing statutory functions will not allow any party to infringe any laws and if the drug for which approval has been sought by the defendants is in breach of the patent of the plaintiffs, the approval ought not to be granted to the defendant. This decision by the Hon’ble Delhi High Court created unrest amongst various generic companies. This order placed the onus of ‘patent policing’ on Drugs Controller to ensure that none of the generic drug applications submitted for approval, violate the patent rights of any originator drug company. The aforesaid judgment was criticized and considered undesirable as it burdened the Drugs Controller with the additional duty of policing patent rights. Assessment of patent’s validity is considered a complex question which only the patent officer or the court has the capability of resolving.

Bayer Corporation & Anr v. Union of India & Ors

In this landmark case of 2010, the Hon’ble Supreme court yet again dealt with the concept of ‘patent linkage’, putting to rest the controversy relating to the same and categorically declaring it to be impermissible in India.

FACTUAL BACKGROUND

Bayer Corporation first filed a writ petition in the Hon’ble Delhi High Court which was dismissed by a learned Single Judge in August 2009 [13] , making it clear that Bayer’s argument of inferring drug agencies’ role in patent policing or enforcement is unacceptable. The second respondent in the case was Drugs Controller and the third was Cipla Ltd. Bayer further appealed before the division bench of the Delhi Court and the judgment for the aforesaid was pronounced in February 2010 [14] , upholding the judgment of the Single Judge in 2009. The Indian Patent office had granted a subject patent to the appellant under the Indian Patents Act, 1970, for its drug ‘Sorafenib tosylate’, prescribed for the treatment of advanced renal cell carcinoma (cancer). Bayer filed the appeal seeking directions to, inter alia, restrain grant of marketing approval to Cipla for its drug ‘Soranib’, as the appellant claimed it to be an imitation of, or substitute for, its patented drug. The appeal was dismissed by the Hon’ble Delhi High court. Bayer then filed a Special Leave Petition in the Supreme Court which was decided in December 2010, against Bayer Corporation, upholding the judgment of the Delhi High court.

Appellant’s (Bayer Corporation) Contentions

The Counsel for Bayer Corporation first contended that under Section 48 [15] of the Indian Patents Act, 1970 (hereinafter referred as ‘Patents Act’), a patent holder has an absolute right to restrain anyone from “making, using, offering for sale, selling or importing” the drug covered by subject patent in India, which in this case was “sorafenib tosylate”. Further Section 2 of Drugs and Cosmetics Act (hereinafter referred as ‘DCA’), 1940, stated that the provisions of the Act “shall be in addition to a law, and not in derogation of any other law” which would include the Patents Act. Consequently, Section 2 of DCA read with Section 48 of Patents Act provided the concept of patent linkage, which imposed a duty on the Drugs Controller to ensure that his decision regarding grant of marketing approval of a drug, should not derogate from any other law for the time being in force.

The Counsel also placed reliance on the contents of Form 44 under the DCA (relatable to Rule 122 B (b) of Drugs and Cosmetics Rules) which require the applicant to indicate the patent status of the drug. According to the appellant the need to mention the patent status indicated that Parliament intended patent linkage.

Another contention that was raised by the Counsel for the appellant was regarding ‘Spurious Drugs’. As according to Section 17B of DCA, a drug shall be deemed to be spurious “if it is an imitation of, or is a substitute for, another drug or resembles another drug in a manner likely to deceive or bears upon it or upon its label or container the name of another drug unless it is plainly and conspicuously marked so as to reveal its true character and its lack of identity with such other drug”. Bayer claimed that ‘Soranib’ was an imitation of, or a substitute for, its patented drug and that by granting such license, the DCGI would permit the marketing of a spurious drug. It was contended that since it was known at the time of Cipla’s application for marketing approval that Bayer held the patent for ‘Sorafenib tosylate’, the DCGI was under an obligation, flowing from a collective reading of Section 2of DCA and Sections 48 and 156 [16] of the Patents Act, to decline Cipla’s application for marketing approval for ‘Soranib’.

Respondent’s (Cipla Ltd.) Contentions

The Counsel appearing for the respondent submitted that there is no concept of patent linkage in India. The Parliament has not intended to adopt the same; and avoided it despite being aware of the existence of patent linkage in other countries. He further states that the interpretation by the appellant as regards Section 2 of DCA is ambiguous, because the mere grant of marketing approval by the Drugs Controller cannot amount to patent infringement. The grant of a marketing approval by the DCGI to Cipla on the basis that the drug was safe and effective was not an act of ‘making, using, offering for sale, selling or importing’ the appellant’s patented product. Also, the existence of patent infringement cannot be assumed merely because the patentee states so, but has to be clearly established in a court of law, and such assessment is beyond the statutory powers of the Drugs Controller, as he is incapable of dealing with such complex issues.

It was further submitted that the contents of Form 44, requiring the applicant to indicate the patent status, as contended by the appellants does not mean that the DCGI is bound to refuse marketing approval for a drug, if covered by a valid patent.

The Counsel for Cipla brought to light the ‘Bolar provision’, which under Section 107A [17] of the Indian Patents Act, 1970, permits any drug manufacturer to experiment with any patented drug with a view to generate data that could be submitted to a drug control authority. The aim of this provision is to encourage the immediate entry of generic drugs on patent expiration.

As regards the Spurious Drugs contention raised by Bayer, the Counsel submitted that with regard to Section 17 B of the Drugs Act, the terms ‘imitation’ and ‘substitute’ in section 17 B (b) cannot be read in isolation to the remainder of the sub-clause. The words ‘substitute for’ were to be read along with ‘in a manner likely to deceive’. The text of the said sub-clause reveals that the same covers a situation, where an individual was passing off his drug as that of another by way of using deceptive marks, get up or packaging and it did not include patents. The Section deems drugs to be spurious “if it is an imitation of, or is a substitute for, another drug or resembles another drug in a manner likely to deceive”. Generics unlike spurious drugs use their own brand name and label.

In the end the Counsel also clarified the concept of patent linkage being that of ‘TRIPS Plus’ and not TRIPS (to which India is a signatory). ‘TRIPS Plus’ concept goes beyond the TRIPS Agreement and creates higher standards, which would result from bilateral, multilateral or plurilateral treaties [18] .

Judgment

The Hon’ble Delhi High Court dealt with the issues advanced by the appellant and respondent and pronounced its judgment, resting the controversial topic of patent linkage.

The Court clearly took a stand on the debate revolving patent linkage and affirmed that no patent linkage regime can be read into the existing legal provisions. The Court highlighted the difference in the schemes and objectives of the DCA and Patents Act. The DCA deals with the looking into the standards of safety before a drug is introduced in the market and the Patents Act, on the other hand, confers patent rights in favor of inventors. Hence, there cannot be drawn a link between the two statutes. It was observed by the court that if it was to establish or decree a patent linkage concept, it would not only be making a policy choice, avoided by the Parliament, but also overstepping its obvious interpretive bounds. In granting marketing approval to a patented drug, the DCGI is by no means itself infringing any patent or abetting the infringement of any patent by the applicant in whose favour the marking approval is being granted.

As regards the content of Form 44, the scheme of the DCA and the DCR envisages that when an application is made for grant of marketing approval for generic version of a patented drug, in respect of which marketing approval has already been granted to the patent holder, the applicant has only to satisfy the DCGI that its drug is bio-available and bio-equivalent to the patented drug. To suggest that patent linkage is established only because one column of Form 44 asks the applicant to indicate the patent status of the drug is to misconstrue the provisions as they stand. A form in an appendix to a statutory rule (in this case the DCR) cannot be understood contrary to the scheme of the statute.

The Court in agreement with the respondent’s contention stated that the DCGI’s office is plainly not equipped to deal with issues concerning the validity of a patent. That is a complex process as is evident from the provisions of the Patents Act. Bayer wants the DCGI to enforce its rights as a patent holder in terms of Section 48 of the Patents Act which is plainly not the function of the DCGI. His powers and jurisdiction are circumscribed by the DCA and not by the Patents Act. The Court also found merit in the contention that when a private right is conferred by a statute, the remedy for an infringement of that right has to be in terms of that statute and no other.

The Court observed that if Bayer’s contention were to prevail that Cipla’s generic version of ‘Sorafenib’ fell under the definition of ‘spurious drugs’ in section 17 B, then every generic drug would ipso-facto amount to a ‘Spurious drug’, since they were deemed substitutes of originator (patented) drugs. Such an interpretation was invalid and contrary to the intent of the Drugs Act. At the stage of application for permission to manufacture or market, all that the DCGI can ensure, consistent with Section 17 B of DCA, is that the proposed brand name of the drug is not similar to the brand name of any other drug. It was held that “generic drug” and “spurious drug” are two different concepts.

The Court also found merit in the argument raised by the respondent regarding patent linkage being a concept of ‘TRIPS Plus’. India is a signatory to TRIPS and that does not in specific deal with the concept of patent linkages. ‘TRIPS Plus’ are multilateral, plurilateral, regional and/or national intellectual property agreements that go beyond the TRIPS Agreement. India at present has not entered into any such ‘TRIPS Plus’ agreements [19] .

Hence, on the aforesaid grounds the Hon’ble Delhi High Court dismissed the appeal. The Supreme Court when approached by Bayer Corporation by a Special Leave Petition, reaffirmed the judgment given by the Hon’ble Delhi High Court and upheld the same. Supreme Court agreed with the Delhi high Court in its decision that no patent linkage concept can be read into the existing legal provisions.

Conclusion- Future of Patent linkage in India

The Bayer case clearly points out that the concept of patent linkage is yet not permissible in India. The issue of patent linkage is a ‘TRIPS Plus’ concept and a policy issue, and the court cannot compel the Government to take a policy decision. More importantly patent linkage would delay the entry of generic medicines and thereby adversely affect the various patients whose survival depends on the availability of such medicines. The Bolar clause in TRIPS Agreement [20] and also seen in Indian Patents Act [21] , makes room for greater competition. It indeed encourages competition for the protection of public health. In case of a life saving drug, the delay of medicines can be extremely dangerous. Patent linkage, if adopted, would pose a serious threat to public health.

At present India possibly cannot go on the track of adopting the concept of patent linkage owing to the fact that we are still a developing nation. Unlike the developed nations, we cannot afford to pay exorbitant prices for drugs, which if provided by the generic companies, would cost lesser. Patent linkages incur huge costs to both the consumers and Governments which sponsor health care [22] . In the case of Bayer Corporation & Anr v. Union of India & Ors, the drug manufactured by Cipla Ltd. was nearly one-tenth the cost of the drug sold by Bayer. In such circumstances the consumers would prefer to invest in a drug that is readily available at affordable prices. India is not completely ready to face a world filled only with Branded drugs and to do away with the Generic ones.

Patent linkage is considered to be a ‘TRIPS Plus’ concept, which goes beyond the provisions of the TRIPS Agreement. India is a signatory to the TRIPS, but has not yet signed any agreement under the ‘TRIPS Plus’ concept with any country either bilaterally or multilaterally. Countries like United States and China have entered into such agreements and this concept is steadily picking up pace. A branded company would prefer to sell its drug in a country which supports the concept of patent linkage, as it provides them with stricter protection of patent rights and also gives the benefit of time between the expiration of the patent term and entry of a generic drug. It is a major concern for India at this point to face the question as to for how long can we avoid the aforesaid concept.