LPA 443/2009 page 1 of 27 HIGH COURT OF DELHI AT NEW DELHI Judgment reserved on: 1st December, 2009 Judgment pronounced on: February 9, 2010 + LPA 443/2009 BAYER CORPORATION & ANR ..... Appellants Through Mr. Shanti Bhushan, Senior Advocate with Mr. Sanjay Kumar, Ms. Arpita Sawhney, Mr. Vineet Rohilla, Mr. Peeyoosh Kalra, Mr. Puneet Kalra, Advocates. versus UNION OF INDIA & ORS ..... Respondents Through Mr. A.S. Chandhiok, ASG with Mr. Neeraj Chaudhari, Mr. Khalid Arshad, Mr. Ritesh Kumar, Mr. Sandeep Bajaj, Advs. for UOI. Mr. A.M. Singhvi, Sr. Adv. with Ms. Prathiba M. Singh, Ms. Saya Choudhary, Mr. Kapil Wadhwa, Advs. for R-3/ Cipla. Mr. Anand Grover, Ms. Nandita Rao, Ms Julie George, Ms. Prathibha Siva Subramaniam, Mr. Arvind, Advs. for R-4.Mr. Jayant K. Mehta with Mr. Sandeep Phogat Advs. for applicant / Indian Pharmaceuticals. CORAM: HON'BLE THE CHIEF JUSTICE HON’BLE DR.JUSTICE S. MURALIDHAR 1. Whether the reporters of local papers may be allowed to see the judgment? Yes 2. To be referred to reporter or not? Yes 3. Whether the judgment should be reported in the Digest? Yes S. MURALIDHAR, J. 1. This appeal is directed against the judgment dated 18th August, 2009 passed by a learned Single Judge of this court dismissing the appellants‟ LPA 443/2009 page 2 of 27 Writ Petition (C) No. 7833 of 2008. In the writ petition the appellants Bayer Corporation and Bayer Polychem (India) Ltd. (hereafter collectively referred to as „Bayer‟) sought directions inter alia to restrain the Drug Controller General of India (DCGI), respondent No. 2 herein, from granting a drug licence to Cipla Ltd. (hereafter „Cipla‟), respondent No. 3 herein (a generic drug manufacturer), to manufacture, sell and distribute its drug “sorafenib tosylate”, prescribed for the treatment of advanced renal cell carcinoma. Facts in brief 2. On 5th July, 2001 Bayer Corporation, Appellant No.1, filed a patent application in India in respect of an invention entitled “Carboxyaryl Substituted Diphenyl Ureas”. On 1st January 2003 Bayer Corporation transferred its rights to Bayer Pharamceuticals Corporation (BPC) and on 1st August 2007 BPC in turn transferred its rights, including the Intellectual Property rights in the drug “sorafenib tosylate” portfolio in India to Bayer HealthCare LLC, a wholly owned subsidiary of Bayer Corporation. On 1st August, 2007 the DCGI granted permission to Bayer Polychem (India) Ltd. Appellant No. 2, in terms of Rule 122 A of the Drugs and Cosmetics Rules 1945 („DCR‟) [relatable to Section 12 (2) of the Drugs and Cosmetics Act 1940 („DCA‟)] to import “sorafenib tosylate” 200 mg. Separately, on 18th January 2008 the DCGI granted a licence (in Form 10 under Rules 23 and 27 DCR) to Appellant No.2 to import “sorafenib tosylate” 200 mg (nexavar tablet). This was to be in force from 8th January 2008 to 31st December 2010. The Patent Office granted the subject patent to Bayer Corporation Appellant LPA 443/2009 page 3 of 27 No.1 on 3rd March, 2008 for a period of twenty years from 12th January 2000 in accordance with Section 53 of the Patents Act 1970 („Patents Act‟). Effective 16th October 2008, Bayer HealthCare LLC assigned its titles to the patented drug “sorafenib tosylate” portfolio in India to Appellant No. 1 which became the patentee of the drug “sarafenib tosylate” in India. 3. According to Bayer, it learned in July 2008 that Cipla had announced the introduction inter alia of a drug “Soranib” which was a substitute for Bayers‟ drug “sorafenib tosylate”. On 31st July 2008 Bayer wrote to the DCGI inter alia requesting that marketing approval be not granted to Cipla for its drug “Soranib”. It was pointed out that the proprietary rights to the molecule “sorafenib tosylate” vested in Bayer HealthCare LLC, a wholly- owned subsidiary of Appellant No. 1. It alone had the marketing rights to sell the drug in India. Bayer Corporation along with Bayer HealthCare LLC asked the DCGI to acknowledge their patent rights and not grant marketing approval to Cipla for launching the generic version of “sorafenib tosylate”. Bayer and Bayer HealthCare LLC wrote another letter dated 2nd September, 2008 to the DCGI with complete specifications along with claims in respect of “sorafenib” and “sorafenib tosylate” granted in favour of Bayer Corporation by the Patent Office. It was submitted that the DCGI ought “to reject the representation of Cipla for grant of marketing approval for spurious adaptation of its patented drug sorafenib tosylate, as the same LPA 443/2009 page 4 of 27 would be in contravention of the DCA. Bayer requested for an opportunity of being heard by the DCGI. 4. On 25th September, 2008 Bayer wrote to Cipla asking it to confirm whether it had filed an application before DCGI for grant of marketing approval for a drug covering “sorafenib tosylate”. No reply was received from Cipla. In the circumstances, on 31st October 2008 Bayer filed the above mentioned writ petition praying inter alia for a writ restraining the DCGI from granting licence to Cipla “to manufacture and market, to imitate/ substitute sorafenib tosylate protected under subject patent number 215758”. A further prayer was for a direction to Cipla to furnish an undertaking that the drug for which it has made an application before Respondent No. 2 was not an imitation of or a substitute for Bayer‟s patented drug “sorafenib tosylate” and consequently would not result in an infringement of the subject patent. Bayer claimed that Soranib was an imitation of, or a substitute for its patented drug and that by granting such licence, the DCGI would have permitted the marketing of a „spurious drug‟ as defined under Section 17 B DCA. 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 2 DCA and Sections 48 and 156 of the Patents Act, to decline Cipla‟s application for marketing approval for Soranib. LPA 443/2009 page 5 of 27 5. Initially an interim ex-parte order was passed by learned Single Judge on 7th November 2008 restraining the DCGI from passing a final order on the application made by Cipla for grant of marketing approval for Soranib. Cipla then applied for vacation of the order. Cipla characterised Bayer‟s contention that an application for grant of marketing approval under DCA was “circumscribed by and controlled by a registered Patent” as “completely untenable” inasmuch the Patents Act and the DCA “operate in completely different fields and there is no overlap”. 6. The DCGI in its counter affidavit submitted that the writ petition was “entirely misconceived”. It was not within the scope of DCA to not grant the said licence on the alleged ground of violation of the provisions of the Patents Act. The DCGI contended that the scheme of the Patents Act and the DCA were completely different and that “these legislations operate in separate areas and do not overlap with each other.” It was stated by the DCGI that it had asked Cipla to furnish comments on the objections raised by Bayer and that it was yet to receive reply from Cipla. The judgment of the Single Judge 7. The learned Single Judge negatived the above contentions of Bayer and concluded that: LPA 443/2009 page 6 of 27 (i) Given the disparate objectives of the DCA and the Patents Act, and both being separate codes enacted for different purposes, there was no merit in the contention that there was a „patent linkage‟. To accept Bayer‟s contention that the DCGI is by virtue of Section 156 of the Patents Act read with Section 2 of DCA bound by the patent granted to Bayer “would be to extend the boundaries of the Patents Act and broaden the reach of drug agencies, who cannot apply patent standards, in their legitimate scrutiny.” It was observed that “an overbroad or liberal interpretation of Section 156 can also mean that wherever patents are granted, all other regulatory agencies are bound, and cannot even apply their standards, to judge the safety, prescribed criteria for public use etc.” Bayers‟ argument that patent linkage was evident from reading Rule 122 B (1) (b) DCR, with Form 44 thereof and the data required (Appendix I to Schedule Y) was negatived. (ii)The linear argument that once a patent is granted for a drug under the Patents Act, then in terms of Section 2 DCA no application by a non- patenetee for marketing approval of such drug can even be entertained, could not be accepted since that was not the intention of the Parliament. It was pointed out that although important amendments were made to the Patents Act in 2005, “Parliament never expressed any intention, significantly, to place patent superintendence, or policing powers, with drug agencies.” Courts were not expected to fill the gaps in public policy spaces. Further when there was an overlap between the provisions in two enactments, “the court should not do violence to one, and undermine its purpose.” (iii)There was a growing opinion, in developed countries, including those of the European Union cautioning against patent linkage. It was believed that the entry of generic drugs resulted in saving of expenditure and health costs. It was pointed out that patent linkage “transforms patents rights which are private property rights that depend on the owner‟s promptitude and desire to enforce them, into LPA 443/2009 page 7 of 27 public rights, whose enforcement is dependent on statutory authorities, who are publicly funded.” Such linkage would undermine the “Bolar/Early Working” of the patent and deny space for generic medicines. Submissions of Counsel 8. Mr. Shanti Bhushan learned Senior Counsel appearing for the appellant first contended that under Section 48 of the 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 DCA stated that the provisions of DCA “shall be in addition to a law, and not in derogation of any other law” which would include the Patents Act. Consequently, Section 2 DCA read with Section 48 of Patents Act provided the concept of patent linkage. It is then contended that the interpretation given by the Supreme Court in Cadila Healthcare Ltd. v. Cadila Pharmaceutical Ltd. (2001) 5 SCC 73 relating to manufacture of a medicine under the trade mark registered in the name of another party would equally apply to a situation where marketing approval is sought for a product which is already patented in favour of another entity. Reliance is placed on the decision of Allahabad High Court in Cattle Remedies V. Licensing Authority (2007) 2 AWC 1093. 9. Mr.Bhushan traced the history of patent legislation in this country to urge that the concept of a patent linkage did exist in some form even earlier. LPA 443/2009 page 8 of 27 According to him Form 44 (relateable to Rule 122 B DCR) was recast after 1995, when India became a signatory to TRIPS. The inclusion of the column in the form requiring the applicant to indicate the „patent status‟ of the drug was done consciously and only with a view to bringing about patent linkage. An applicant was required to mention the patent status of the drug and that this indicated that Parliament intended patent linkage. An applicant seeking marketing approval for a new drug was required to furnish data of clinical trials of the drug in question including its name, composition of the formulation, active and inactive ingredients, pharmacological classification etc. Since the applicant would have to rely on the data generated by the patent holder, by granting marketing approval to Cipla, the DCGI would, in fact, be not only acting in contrary to Section 2 DCA but would be „abetting‟ the tort of infringement of a patent. According to Mr.Bhushan, Section 156 of the Patents Act read with Section 48 thereof obliges the DCGI, whose office is part of the central government, to ensure that the patent granted in favour of Bayer is not infringed and by granting marketing approval to Cipla in respect of an imitation of Bayer‟s patented drug, the DCGI would be party to the infringement by Cipla of Bayer‟s patent. 10. Reliance is placed on the judgment of this Court in Hoechst Pharmaceuticals v. CVS Mani ILR 1983 Delhi 548 where Section 2 DCA and the DCR were interpreted as requiring the DCGI to adhere to the requirements of the Trade and Merchandise Marks Act 1958. Reliance has LPA 443/2009 page 9 of 27 also been placed on the decision of Supreme Court in Arvind Mills v. Associated Roadways (2004) 11 SCC 545 in which the Supreme Court was interpreting Section 3 of the Consumer Protection Act 1986 (CPA) vis-à-vis the Section 10 of the Carriers Act 1865. It was explained by the Supreme Court that remedies under the CPA being in addition to any other law did not mean that the rights under the Carriers Act could be exercised in the manner in consistent with the requirement of the Act. Merely because the procedure under the CPA were summary in nature did not warrant the abrogation of the requirement to serve a notice under Section 10 of the Carriers Act before fastening any liability on the carriers. 11. Although it was argued at length before the learned Single Judge, and also urged in the grounds of appeal, that Cipla‟s generic version of Bayer‟s patented drug would in fact be a „spurious drug‟ as defined under Section 17 B DCA, before this court Mr.Bhushan did not stress on this point. Nevertheless it has been urged in the written submissions and will be dealt with later in this judgment. 12. Appearing for Cipla, Dr. A.M. Singhvi, learned Senior Counsel submits that there is no concept of patent linkage in India at all. The Parliament has consciously avoided it despite being aware of the existence of patent linkage in other countries including the United States of America (U.S.A). The LPA 443/2009 page 10 of 27 DCA itself has been amended several times since its initial enactment in 1940 and there has never been an attempt to being about any linkage between the DCA and the Patents Act. He reiterates the submission made before the single Judge that the scheme and purpose of the two enactments are entirely different. While DCA is concerned with the standards to be followed in the manufacturing, sell, importation and distribution of drugs and chemicals in the country to minimize the risk and promote safety among drug users, the Patents Act is concerned with the grant of patents for inventions. 13. It is submitted by Dr.Singhvi that merely because the Form 44 requires the applicant to indicate the patent status does not mean that the DCGI is bound to ensure that no patented drug is granted marketing approval. He points out that this is not the concern of the DCGI. If the drug for which marketing approval is sought is covered by a patent, and the patent holder (like in this case Bayer) has already been granted approval to import or to market the drug in India as a “new drug” (as defined under Rule 122 E DCR), then the subsequent applicant for marketing approval (in this case Cipla) has in Column 2 B of Form 44 only to indicate the bio availability/ bio-equivalence protocol. This requirement is also only for a period of four years, since the said drug would cease to be a new drug thereafter. In that event approval for marketing would have to be sought only from the local state Food and Drugs Department and not the DCGI. It is submitted that if LPA 443/2009 page 11 of 27 Bayer‟s argument of patent linkage were to be accepted then the DCGI will have to presume that the patent granted is valid, and has to outright reject every application made by a generic manufacturer till such time the said patent is not challenged before the IPAB or the court and revoked. This only would make the entire process uncertain. If the court grants a stay of the patent then during that period the DCGI would be able to grant approvals. When the stay is vacated, the generic drug would become a „spurious drug‟ inviting punishment for the offence under the DCA. It is submitted that Bayer‟s submission is both impractical and unintended on a collective reading of the DCA and the Patents Act. 14. The Cancer Patient Aid Association impleaded itself in the writ petition and is Respondent No. 4 here. On their behalf it is submitted by Mr.Anand Grover, learned Senior Counsel that if the appellant‟s attempts to introduce a patent linkage system in India were to succeed it will inevitably have an adverse impact on access of a large number of cancer patients to safe, effective and affordable medicines. By and large supporting the stand of Cipla, Mr.Grover urges that patent rights are private rights and cannot possibly be enforced by the State. The DCGI is not the appropriate body to enforce a patent. It is submitted that under the DCA read with the DCR, the main function of the DCGI is to ensure safety, quality and efficacy of the drugs available to the public in India. The DCA specifically sets out the procedures and criminal sanctions relating to spurious drugs. Section 27 LPA 443/2009 page 12 of 27 DCA states that if the drugs are below the standard quality the manufacturer of such drug is liable for penal sanctions. It is submitted that the generic drugs cannot be held to be spurious drugs inviting such criminal sanction merely because they infringe a patent. The patent holder has adequate remedies under the Patens Act to enforce and protect its patent. It is urged that the adverse effect of patent linkage on access to affordable medicines has been documented extensively. Reference in this regard is made to the briefing note of the World Health Organization (WHO). It is submitted that the issue of patent linkage is a TRIPS plus concept and a policy issue and the court cannot possibly compel the Government to take a policy decision. More importantly it is urged that patent linkage would delay the entry of generic medicines and thereby adversely affect the numerous cancer patients whose survival depends on the availability of such medicines. He points out that TRIPS itself has in-built flexibilities. He points out that „Bolar‟ clauses (like Section 107 A of the Patents Act, introduced in 2002) are a TRIPS innovation that is meant to encourage competition. The greater the competition the better it is for the protection of public health. 15. On behalf of the DCGI, it is submitted by Mr. A.S. Chandhiok, learned ASG that the nodal ministry for the administration of the DCA and the DCR is the Ministry of Health and Family Welfare whereas for the Patents Act it is the Department of Industry Promotion, under the Ministry of Industry and Commerce. A reference is made to Section 68A DCA which deals with the grant or renewal of licence by the Central Licence Approving Authority, LPA 443/2009 page 13 of 27 which is the DCGI. In terms of the said provision, an application for grant of permission to import or manufacture a new drug or to undertake a clinical trial has to be submitted in Form 44. It is confirmed by the DCGI that it had granted Appellant No.2 permission to import „Sorafenib Tablet‟ by a permission dated 1st August 2007. Cipla had also applied to it for permission to manufacture and market „Sorafenib Tosylate‟ 200 mg tablets. It is acknowledged that the petitioner had written to the DCGI asking it not to grant market permission to Cipla and its representations were sent to Cipla for its comments. It is submitted that the DCA primarily deals with the issue of safety, efficacy and quality of a drug. It is submitted that the scheme, aims and objects of the two legislations viz., the Patents Act, 1970 and the DCA are completely different. 16. Mr. Jayant Mehta, learned counsel appearing on behalf of the intervener, the Indian Pharmaceutical Alliance, supported the stand of Cipla. It is pointed out that an administrative body like the DCGI is not competent to adjudicate upon rights flowing from a patent. If Bayer‟s arguments were to be accepted then the court would be allowing for penal consequences for the infringement of a patent, whereas the Patents Act itself does not contain any such provision. He points out that Patents Act is traceable to Entry 49 of List 1 (Union List) of Schedule 7 to the Constitution whereas the DCA is traceable to Entry 19 of List 3 (concurrent list) which relates to drugs and poisons. While a person covered by the DCA cannot avoid the obligations under the Patents Act, in terms of Section 2 DCA, the DCA itself is not LPA 443/2009 page 14 of 27 meant to be exhaustive to cover all aspects of the drug which is sought to be marketed including the enforceability of its patent. The issues 17. The issues that arise for consideration are: (a) whether the DCGI can grant marketing approvals under the DCA to generic versions of patented drugs, (b) whether the grant of such marketing approvals to generic versions of a patented drug is in derogation of the Patents Act and (c) whether generic drugs are spurious drugs in terms of the DCA? Is there a patent linkage in terms of the Patents Act and the DCA? 18. In the first place, an analysis is required to be undertaken of the provisions of the Patents Act, the DCA and the DCR. Under Section 13(4) of the Patents Act the grant of a patent shall not deemed in any way to warrant its validity and no liability shall be incurred by the Central Government in connection with any examination or investigation or any report or proceedings consequent thereon. In another words, a patent has been granted to an applicant can be challenged on various grounds in accordance with the Patents Act. When a suit for infringement is filed by the patent holder, the defendant can always raise, as part of its defence, a challenge to the validity of the patent. The decision of the Supreme Court in M/s. Bishwanath Prasad Radhey Shyam v. Hindustan Metal Industries (1979) 2 SCC 511 reiterates the settled law that “the grant of the patent does not guarantee its validity.” LPA 443/2009 page 15 of 27 19. Section 48 of the Patents Act, which has been expressly made subject to the other provisions of the Patents Act, confers on the patentee, both where the subject matter of the patent is a product or a process, the exclusive right to prevent third parties, without prior permission of the patent holder, from “making, using, offering for sale, selling or importing for those purposes” in India the patented product or a product obtained by the patented process. This is a negative right which is enforceable at the instance of the patent holder and only subject to other provisions which permit challenge to the validity of the patent to be raised as a defence in a suit for infringement of the patent. This is evident from Sections 64 and 107 of the Patents Act. Therefore, it appears that in relation to any steps that a patent holder might wish to take protect the patent from being infringed, resort should be had only to the provisions of the Patents Act. 20. The contention that the DCGI is bound by the injunction in Section 48 prohibits any third party from even “offering for sale” the patented product without the consent of the patent holder, is based on a misreading of Section 156 of the Patents Act which states that the central government is also bound by such patent. In the considered view of this court, the purport of Section 156 is not that the DCGI, who