The last thing an innovative pharma company wants is to lose their patent to a maker of generic drugs, particularly after investing a decade or more of time and millions – or billions – of dollars. Pravin Anand explains the steps these companies have taken, and how the innovators have fought back. 

Drug discovery and drug development is a lengthy and expensive process. It may take up to 10-15 years from the earliest stage of discovery of a drug for the drug to be available in the market. It takes billions of dollars to manufacture one successful drug and out of thousands of compounds tested, only one receives approval.  

On the other hand, the costs incurred by generic companies would be much lower than they are for the innovator, since there is little or no research and development cost involved, which is usually very high.  

Under India’s patent regime, a generic drug cannot be sold until the expiry of the patent of the innovator drug. However, the modus operandi of these generic companies has been to commercialize their generic drugs even when the patent on the innovator drug is subsisting, which has led to multiple law-suits. Over the years, the generic companies have gone through several strategies to escape infringement, as enumerated below: 

That public interest supports generic medicines 

It all started with the generic companies arguing that it is in the interest of the general public that medicines are made available at cheap and affordable prices. One of the earliest patent litigations in the post product patent regime for pharmaceutical products, was the Roche v. Cipla litigation. In the said case, an injunction was refused at the interim stage on the basis of public interest by the Single Judge, and it was held that the injury to the public which would be deprived of the defendant’s product for cancer would be irreparable. Eventually, the matter was decided in favour of the plaintiffs and over the years, the law has evolved regarding this particular aspect. 

Dumping large quantities of infringing goods in the market 

Another one of the earliest cases, back in 2008, was the case filed by BMS against Hetero. In the said case, the court granted quia timet injunction restraining the defendants from launching in the market, a drug known as dasatinib. This was based on the apprehension arising from the defendant’s application for a manufacturing license from the drug authorities.  

Many such orders were subsequently granted on the basis of an application for a manufacturing/marketing license; revocation petition, etc., filed against the innovator’s patent, etc. 

Sometimes, the court would also grant a status quo order, which then prevented the defendants from marketing or commercializing the drug, until the expiry of the patent.  

However, the generic companies quickly learnt to defeat a quia timet action by dumping a small quantity of products in some remote markets like that of Assam and in a clandestine manner to not alert the right holders.  

Some of these were not commercial launches but disguised launches meant to create a defense that the goods were already in the market and the status quo orders ought not to be granted. Thereafter, the court started granting injunction orders and not just status quo orders, particularly when the launch had just taken place and it appeared to be a colourable or disguised launch.  

Sometimes these quantities were also significant such that the infringers would flood the markets and created a dent in shifting the balance of convenience in favour of the infringer. Thus, impacting the possibility of an injunction or a recall of the products in the market. For example, in BMS v. NATCO involving the anti-coagulant apixaban, Natco revealed in its affidavits filed before the Single Judge that it had released 549,292 bottles containing 16,478,760 tablets under 15 batches of the infringing product Apigat which (in the plaintiffs’ estimation) amounts to approximately Rs300 million (US$3.58 million). 

Misinterpreting the meaning of a status quo order 

In situations where some manner of activity qua the impugned products was undertaken by the infringers, status quo orders would be the norm. The term ‘status quo’ means ‘existing state of things at any given date.’ Thus, this would mean that any further activity qua the impugned product would be stopped. For example, if 50 products have been sold in the market, no further products may be sold in case of a status quo order. 

However, soon the infringers also started misinterpreting the meaning of status quo. For instance, if the infringers were manufacturing and selling the impugned product until before the date of the order, they may continue to do so on the behest that they were already manufacturing and selling the impugned product, till before the date of the order.  

Clearing the way 

As the patent law jurisprudence evolved, one of the legal propositions that became significant was the concept of ‘clearing the way’. In the Merck v. Glenmark decision of the Division Bench of the Delhi High Court regarding sitagliptin dated March 20, 2015, the court was of the view that if a defendant is aware that there may be a possible challenge to its product but still chooses to release the drug without first invoking revocation proceedings or attempting to negotiate, that is surely a relevant factor. This principle was followed in various other cases, such as Eisai v. Satish Reddy. 

Thus, the generic companies started filing revocation against the innovators’ patents. However, they did not choose to wait for the outcome of the proceedings before commercializing the product. In the case of Novartis v. Natco, which was regarding ceritinib, wherein post-grant opposition proceedings were filed by the defendant, the court clarified that the defendant ought not to have launched the product while the decision is pending. 

Declaratory suit 

Another strategy adopted by the generic drug makers was to file an action for declaration of non-infringement under the Patents Act. Such actions were filed in different cities like Hyderabad, Bangalore, Pune and others with a view to altering the jurisdiction of the court and to take infringement actions away from the Delhi High Court.  

The real abuse of this strategy emanated from the fact that these suits were not instituted under Section 105 of the Patents Act, 1970 but under Section 34 of the Specific Relief Act, 1963. Section 105 has a notice requirement prior to initiating an action. Thus, by invoking the Specific Relief Act, they tried to forego the prerequisites of Section 105.  

Further, such suits were also used for staying an infringement suit which followed, including having the same transferred to these different cities where the declaratory suits were filed.  

The plaintiffs in several cases argued that such lawsuits did not lie particularly when the non-infringement issues were coupled with the invalidity allegations as the law did not permit such declaratory suits to claim invalidity. In several actions, the court held that such cases filed by the generic companies against the patentees to be abuse of law. For eg: BMS v. Natco, (order dated January 23, 2020). 

Bolar provision 

Under Section 107A of the Patents Act, one is allowed to deal in the product for research and development purposes and for submission to the regulatory authorities, even during the validity of the patent. Thus, the trend started wherein the generic drug makers were willing to suffer an injunction or provide an undertaking that they would not commercially launch the product, except as permitted under Section 107A.  

Under the garb of the Bolar provision, the generic drug makers were found to be supplying the drugs to various entities. 

Entry into India through patent-free jurisdictions 

The generic companies then started to adopt yet another strategy, namely to relocate the manufacturing facilities of the infringing product in neighbouring countries like Sri Lanka, Bangladesh or Bhutan, where the proprietor had no patents. In fact, some of these jurisdictions like Bangladesh do not have patents for pharmaceutical products and thus anyone is free to commercialize the drug. Therefore, there would be no infringement by the drug manufactured in that location so-long as it is sold in the said jurisdiction. However, the problem arose on account of the following: 

1. The product was being smuggled into India or sold clandestinely or surreptitiously, but not openly.  

2. In fact, some companies in India were found to be linked to these foreign manufacturing entities in some way or backing these infringing activities. 

3. The product was found to be advertised on e-commerce website like India MART, Trade India or other websites advertise the product. The sellers whose names appear on the websites would, however, come to court and say that they had not authorized these entries, but that they had been placed by the websites.  

4. Thus, BMS, Pfizer and AstraZeneca, had their patents infringed through the importation of products manufactured in Sri Lanka, Bangladesh and Bhutan, by parties who were said to be unrelated to Indian companies but goods were imported into India and sold in large quantities in India. 

This strategy was brought to a halt in the case of Sugen & Pfizer v. S.P. Labs & Ors. In this case, all the defendants agreed to give undertakings and agreed to not violate the suit patent except the entity headquartered in Bangladesh. The plaintiff alleged that the Bangladesh entity was part of the same group with common directors and ownership and this issue was disputed by the defendants.  

The matter went to trial in contempt proceedings when evidence was recorded and it was finally argued. The court held that there had been contempt of court and the Bangladesh entity was related to the Indian companies. This took some time to establish and at the cost of fair amount of effort. However, this has exposed the practice of locating manufacturing facilities outside India and importing the goods clandestinely and surreptitiously. 

Credible challenge to the patent  

The generic drug makers have also adopted standard defenses to try to argue credible challenge to patents and to misinterpret and misapply the same to benefit their cause. For instance, the attack on a species patent on the basis of a genus patent; applicability of Section 3(d) even in cases of a New Chemical Entity; Section 8 disclosure; etc. In most cases, particularly challenges on the basis of obviousness/anticipation, a hindsight analysis was found to be done.  

Recently, in the case of Pharmacyclics LLC & Anr. v. Hetro Labs Ltd. & Ors. (the ibrutinib case), it was held that the challenge has to be credible and credibility requires a fairly high degree to be met. 

Some of other methodologies adopted, are as below:  

• Sale of the infringing product through multiple brands. For example, Natco was found to be selling erlotinib hydrochloride (a patented drug of F. Hoffmann-La Roche) under multiple brands, including Erlonat and Tyrokinin. 

• Manipulating the date of launch to defeat the impact of an injunction/status quo order. For example BMS v. NATCO (apixaban) and Bayer v. Natco (regorafenib). 

• Wrongly filing an application seeking a compulsory license (later withdrawn) and surreptitiously manufacturing in India and diverting infringing products to Nepal in contravention of permission granted by DCGI. Sugen Inc. & Anr. V. A. Rao & Anr. 

• In the recent past, Rule 36 of the Drugs and Cosmetics Rules has been invoked to argue that the import is carried out by individuals for their personal use.  

Thus, as evident from the above, the generic drug makers are adopting the aforesaid strategies to escape infringement. 

About the author 

Pravin Anand is managing partner at Anand and Anand in Noida, and is one of India’s leading IP, litigation and dispute resolution lawyers. In a career spanning over four decades, he has emerged as an IP trailblazer, appearing in more than 2,500 cases. He has strengthened India’s IP jurisprudence with a practice encompassing all areas of IP litigation including patents, copyright, design, trademarks, enforcement, and dispute resolution. Anand joined the firm in 1979 as an extension of the law firm established by his grandfather in 1923. From a one-room office in Old Delhi, he took the firm to new heights with offices in four major cities and a diverse pool of 400 professionals. His approach in and out of court has broken new ground in IP rights; today, from Christian Louboutin to Cartier, from pharma to tech majors to policymakers and from art to entertainment, Anand represents most famous brand owners, leading industries and eminent personalities who rely on his matchless experience for protection of their intellectual property.