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Roche vs CIPLA: "Public Interest" Imported into Indian Jurisprudence


Readers may recollect an earlier post on the recent Roche vs CIPLA decision, where we point to the fact that the Delhi High Court order refusing to injunct CIPLA effectively paves the way for “judicially created” compulsory licensing norms in India.

So how does Indian law on this point compare with the US? The key distinction appears to be that while US courts explicitly factor in “public interest” whilst deciding whether to grant an injunction (restraining order) or not, Indian courts do not normally recognise “public interest” as a separate factor. In a previous post explaining the US law on injunctions in IP cases, we note as below:

“Another landmark patent case that reforms US patent law to a considerble extent is “Ebay vs Merck Exchange”. This case by the Supreme Court came down heavily on the CAFC (Court of Appeals for the Federal Circuit) practice of grating injunctions in patent cases routinely, and almost as a matter of right. The Supreme Court held that an injunction in a patent case is not automatic but is dependent on the facts of each specific case. It is no different from injunctions in other cases, and can issue only if four conditions are satisfied:

1) that it has suffered an irreparable injury; (2) that remedies such as monetary damages, are inadequate to compensate for that injury; (3) that, considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and (4) that the “public interest” would not be dis-served by a permanent injunction.

For an excellent discussion on the judgment, see this post from the leading patent blog in the US, Patently-O.”

Subsequent to this case, in several electronics and IT cases, US courts have not granted injunctions, but only damages. Illustratively, see this note on a decision, where Microsoft benefited from the eBay rule. As one can appreciate, this operates very much like a “compulsory license” and if applied to pharma, would greatly favour the generic companies.

Contrast the US position/test above with the test in India where courts have traditionally gone by the 3 step test in the landmark British case, American Cyanamid vs Ethicon Ltd, and granted an injunction only when the IP owner has established:

i) That it has a prima facie case
ii) That the “balance of convenience” was in its favour
iii) That it would suffer “irreparable injury”, if the alleged infringer was not injuncted

As one can see, “public interest” is not a separate factor in the above 3 step test. Justice Ravidner Bhat however cleverly reads in “public interest” into the balance of convenience/irreparable hardhsip test (steps ii) and iii)). When assessing these factors, he not only looks into the direct convenience/hardship of CIPLA and Roche, but also factors in the interests of cancer patients in receiving affordable medication i.e public interest. I quote from the judgment:

““ Court is of the opinion that as between the two competing public interests, that is, the public interest in granting an injunction to affirm a patent during the pendency of an infringement action, as opposed to the public interest in access for the people to a life saving drug, the balance has to be tilted in favour of the latter. The damage or injury that would occur to the plaintiff in such case is capable of assessment in monetary terms. However, the injury to the public which would be deprived of the defendant’s product, which may lead to shortening of lives of several unknown persons, who are not parties to the suit, and which damage cannot be restituted in monetary terms, is not only uncompensatable, it is irreparable. Thus, irreparable injury would be caused if the injunction sought for is granted.”

So now, we have “public interest” as a factor in our injunction jurisprudence (apparently even the first Novartis EMR case seems to rely on “public interest” for denying an injunction). And if Justice Bhat’s ruling holds good, then in every case, where the “public interest” is in favour of the generic infringer (likely to hold true in most cases involving important drugs), no injunction would issue. Rather, the patentee is only entitled to damages i.e a “compulsory license” like situation prevails. In other words, apart from the compulsory licensing (CL) provisions in Chapter VII of the patents act, judicial decisions awarding compensation (whether as a lumpsum or as continuing royalties) operate as another stream of “compulsory licenses”.

Shamnad Basheer

Shamnad Basheer

Prof (Dr) Shamnad Basheer founded SpicyIP in 2005. He is currently the Honorary Research Chair of IP Law at Nirma University and a visiting professor of law at the National Law School (NLS), Bangalore. He is also the Founder of IDIA, a project to train underprivileged students for admissions to the leading law schools. He served for two years as an expert on the IP global advisory council (GAC) of the World Economic Forum (WEF). In 2015, he received the Infosys Prize in Humanities in 2015 for his work on legal education and on democratising the discourse around intellectual property law and policy. The jury was headed by Nobel laureate, Prof Amartya Sen. Professional History: After graduating from the NLS, Bangalore Professor Basheer joinedAnand and Anand, one of India’s leading IP firms. He went on to head their telecommunication and technology practice and was rated by the IFLR as a leading technology lawyer. He left for the University of Oxford to pursue post-graduate studies, completing the BCL, MPhil and DPhil as a Wellcome Trust scholar. His first academic appointment was at the George Washington University Law School, where he served as the Frank H Marks Visiting Associate Professor of IP Law. He then relocated to India in 2008 to take up the MHRD Chaired Professorship in IP Law at WB NUJS, a leading Indian law school. Prof Basheer has published widely and his articles have won awards, including those instituted by ATRIP and the Stanford Technology Law Review. He is consulted widely by the government, industry, international organisations and civil society on a variety of IP issues. He also serves on several government committees.

7 comments.

  1. AvatarAnonymous

    On that public interest point.. i am reminded of a Counsel arguing in Delhi High Court in an injunction matter..”My Lords..this injunction is against public interest..because the public will be deprived of good beer!”

    What would be the case if the drug patented by a multinational pharma, is manufactured by a licensee in India…worked extensively…and still a generic inspired by CIPLA goes ahead and copies? What is public interest then?? Accessibility or affordability? Both?

    Accessibility can still be taken care of…but what about drug prices? Will pharmaceuticals be run like charities so they can protect their patents?

    Reply
  2. AvatarShamnad Basheer

    Dear Anonymous,

    Great point. Going by the spirit of J Bhats ruling, mere “price” differential alone in the context of a drug for a serious medical condition suffices to tilt the “balance” in an injunction application in favour of generic. so assuming the drug is an ARV or an anticancer drug, then it will qualify for the judge made CL rule that I speak about in the post, even if it has already been licensed to an Indian manufacturer (but the price of CIPLA is considerably lower). In effect, we see the resurgence of a “licenses of right” regime in India, where some pharma patents are automatically eligible for CL applications.

    You then ask: Do pharma companies have to be run like charities here? Not sure how a CL regime would impact their pricing. I’m guessing it would cause a lot of them to bring down their prices in India. Or come to terms with a CL regime, where generics manufacture their drugs and pay them royalties. Given that their worldwide pricing strategy has been far from optimal (where drugs are priced irrespective of the countrys paying capacity), this might be a good thing. Will they recoup the money in R&D? The Indian market is not that big–so no question of a CL regime seriously impacting their bottomline or compromising global R&D in a serious way. Either they lower prices (in which case), they sell more drugs in India (in most cases at least). Or at least, they get royalties from CIPLA. So they still make money in India…and to this extent, your”charity” comparison may be far fetched..

    Let me also refer you to a paper by Colleen Chien of Santa Clara, where she demonstrates that CL orders in the US never really impacted innovation in any significant way. See “Cheap Drugs at What Price to Innovation: Does the Compulsory Licensing of Pharmaceuticals Hurt
    Innovation? 18 Berkeley Technology Law Journal 853 (2003)”.

    So here again, lets look at numbers and evidence before we begin to resort to a faith based: this will harm the innovation incentives of big pharma, who find that they have to be run like charities…..

    Reply
  3. AvatarAnonymous

    Thank you for your comments!

    When i said charity i did not mean in context of a ‘statutory’ CL being issued but a pharmas efforts to prevent the likelihood of a generic winning a preliminary injunction.

    To avoid a generic from infringing a patent the only resort would be reduce the price to a bare minimum ..otherwise a CIPLA’tic generic would always go ahead with its generic version of the drug and wait to be sued cause the Court is likely to allow him to infringe for some time (and we know there are tricks to stall the matter in Court)In this context I am sure I would benefit from a little insight into R&D expenses of a pharmaceutical – separate the actual expenses from the theoritical.

    On the CL point I agree with you, and also admit that I have no clue about the actual effects of a CL on the Pharmas business. Shall read the paper.

    But the judge-made CL you are talking about..correct me if I am wrong .. this is basically – the Court shall allow the generic to sell in the market till it conclusively determines that the generic infringed the patent.

    If, after such determination, assuming it is in favour of the Pharmaceutical company, three situations can arise:

    – Patent period has expired
    – Patent is in force but three yrs from date of grant have not expired
    – Patent is in force and three years have lapsed from the date of grant of patent

    Will the Court continue the CL-like situation in each case above? So except damages, what is that the Pharmaceutical will gain from a litigation?

    Reply
  4. AvatarShamnad Basheer

    Once again, you’ve raised excellent points.

    One of the possibilities that you’ve not mentioned at the final stage is the judge itself coming to the conclusion that there is no need for a permanent injunction–but that continuing compensation in the form of royalties would suffice.

    As you rightly point out, the only way that big pharma can avoid this is by selling at comparable prices in India (it could be higher than generic prices–but not that high…am sure judges will not come down harshly if it is a 10% increase. but not a 300% increase which is what the difference between cipla and roche was). or they accept this as something to work with and remain happy with the royalties that they make from the generic sales..

    Reply
  5. AvatarAnonymous

    I was reading a discussion in [IP-Health] about royalty rates in CL cases. http://lists.essential.org/pipermail/ip-health/2008-April/012421.html

    The discussion obviously is very policy-centric..keeping in mind TRIPS obligations,government’s soverign rights, trade barrier issues and implications on R&D. But it seems to suggest that if the royalty rates were higher than a 5% (in fact be determined by market demand of the product)..it might reduce opposition towards generics from patent holders. it does seem logical but unsure whether it would make up for reduced R&D.
    Royalty rates could be determined on (a fancy term i randomly came across in relation to telecommunications technology)Fair, Reasonable and Non-Discriminatory terms. Ofcourse the whole question is What would constitute FRAND, Who would decide FRAND or Whether both parties wd agree to FRAND?

    Reply
  6. AvatarAnonymous

    correction – in a CL situation the Court would decide fair reasonable etc. – but in an infringement suit where damages are by way of a royalty – there could be unrest on the amount of royalty. If such is the case would a Pharma be forced to adhere to the judge-made-CL even if the patent is valid?

    Reply
  7. AvatarAnon2

    Wasnt the Ebay v. Merck Exchange case about PERMANENT injunctions and when these should be granted, while the Roche case you discuss here is about when to grant PRELIMINARY/TEMP injunctions?

    Reply

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