Regulatory Approval-IP Linkage: Allahabad High Court’s Decision in 2007

IP aficionados in India must be familiar with the issue of regulatory-patent linkage which was the issue central to the Nexavar patent dispute between Bayer Corporation and Cipla. Prior to Bayer, Cipla and the Drug Controller General of India (DCGI) locking horns in 2009, two other lesser known Indian entities knocked the doors of the Allahabad High Court in 2007 on a similar issue.

Although the decision of the Allahabad High Court featured in the subsequent Bayer judgments of the Delhi High Court in 2009 and 2010, surprisingly the Allahabad decision itself did not get as much print-space in 2007 as one would have expected it to. Anyways, I guess it helps to keep one’s eyes and ears peeled to Courts other than the Delhi High Court too.

The decision of the Allahabad High Court was pronounced in a writ petition filed by "Cattle Remedies" against the licensing authority for Ayurvedic and Unani medicines. (For those who didn’t know, Ayurveda and Unani are referred to as “alternative forms” of medicine by practitioners of allopathy. That said, these indigenous forms of treatment are the main stay for large parts of rural India)

The co-respondent in the writ petition along with the licensing authority was Bio-herbs Pharma. Both the petitioner and the co-respondent were manufacturers of Ayurvedic and Unani medicines. The drugs over which the case was fought were Catone, Catcough and Uterotone (for improved digestion, common cold and increased “reproductivity” respectively).

A reading of the judgment tells one that this was one bitterly fought bare-knuckled battle over trademarks and regulatory licenses to these drugs. In a nutshell, both parties were granted regulatory licenses to manufacture the drugs, but the bone of contention was this- both parties wanted to sell the drugs under the same names and both claimed the same trademarks as well (assuming the “marks” were indeed marks permissible under the Trademarks Act, 1999).

Therefore, the issues in the petition before the Allahabad High Court were as follows:

1. What is the meaning of “patent or proprietary medicines” under Section 3(h) of the Drugs and Cosmetics Act, 1940 (“Drugs Act”)?

2. Did the 3 drugs in issue qualify as “patent or proprietary medicines” under Section 3(h) of the Drugs Act?

3. Does the Drugs Act mandate the grant of regulatory licenses only in the name of the brands/trade names of the drugs?

Before we proceed any further, it’s important to understand a few things about the framework of Drugs Act and here I quote the judgment:

“The Drugs Act is enacted to regulate import, manufacture, distribution, and sale of drugs and cosmetics. It not only prohibits sale of misbranded, adulterated, spurious and substandard drugs but also prohibits manufacture of any drug except under a licence granted under the Drugs Act. Broadly, it provides uniform control of distribution and manufacture of drugs. It ensures that the person manufacturing the drug has expertise and capability to manufacture drugs of the standard laid down in the Drugs Act.”

 The Drugs Act envisages two categories of drugs:

1.  the first that are called “patent or proprietary medicines”, and

2. the second that are non-proprietary medicines, which have been prepared based on formulations disclosed in the authoritative books of the Ayurvedic and Unani forms of medicine.

Each of these categories is governed by a set of conditions. Let’s start with the second category.

According to the Court, Non-proprietary medicines are those:

A. Which are manufactured exactly in accordance with the formulae prescribed in the authoritative texts of Ayurveda and Unani

B. Which strictly adhere to the texts with regard to the constituting ingredients of the medicines and the quantity in which such ingredients are to be used, and

C. Which must be sold under their generic names by all manufacturers, with only manufacturer’s name serving to distinguish one source from the other.

In other words, there can be no brand names or trade names for medicines which fall within the “non-proprietary category” under the Drugs Act.

Moving to “patent or proprietary” medicines, under Section 3(h) they are those:

A. Which shall use ingredients mentioned in the authoritative texts of Ayurveda and Unani

B. Which do not adhere to the formulations mentioned in the texts,

C. Which are not administered through the parenteral route, And

D. Which perforce have to be sold under different trade-names by different manufacturers

Application to the Facts of the case

The drugs in dispute in the case clearly fell under the category of “patent or proprietary” medicines since they did not replicate the formulations mentioned in the authoritative texts of alternative medicine. Further, the drugs manufactured by both parties differed in their formulations between themselves too. Therefore, both the petitioner and the respondent could not sell the drugs under the same name, for that would cause confusion to the public.

The Court acknowledged that both manufacturers could not use the same trademarks/brand names for their products. The Court then referred to Section 17B of the Drugs Act, which deals with “Spurious Drugs”.

The reason the Court discussed this provision is because Section 17B defines a spurious drug as one which resembles another drug in a manner which is likely to deceive the purchaser/consumer. Consequently, between the petitioner and the respondent, the one whose drugs resemble the other in a manner likely to deceive the public would be guilty of selling spurious drugs.

Referring to Sections 17B and 33EA of the Drugs Act, the Court observed thus:

“Though these sections do not use the word trademark, they say that a spurious drug is one that resembles another drug in a manner likely to deceive. We have already held that the disputed drugs manufactured by the parties are different. In case same names are given then there is likelihood of the persons being deceived. And a medicine that is patented under the Patents Act cannot be manufactured by anyone else except under a licence. In our opinion the licensing authority while granting licence to manufacture 'patent or proprietary medicine' under the Drugs Act should not grant licence in the trade name/mark of any other party.

 At the time of grant of licence, the licensing authority should consider the following two points:

(i) Whether the name is the trademark of anyone else or not, and

(ii) Whether the medicines are patented under the Patents Act or not?”

However, noting that existing requirements under the Drugs Act did not provide for verification of the above details by the licensing authority, the Court urged that the Rules under the Drugs Act be amended to provide for such particulars to be filled in by an applicant for a regulatory license. (This observation of the Court is surprising because it appears that until recently an applicant for a regulatory approval/license had to disclose the patent status of the drug)

In the specific facts of the case, the issue of ownership/prior use of the marks was not decided by the Court since it was not within the Court’s powers to do so in a writ petition. Consequently, bearing public interest in mind, the Court forbade both parties from using the trademarks/brand names until the issue of ownership of the marks was decided finally.