A battle between patent owners and pharmacies

September 1st, 2023
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Bayer Intellectual Property GMBH and Others v New Clicks South Africa (Pty) Ltd and Others (CCP) (unreported case no 2022/8099; 06238/2007, 7-7-2023) (Collis J)

On 7 June 2023, more than a year after reserving judgment in an urgent application, Collis J delivered judgment in the case of Bayer v Clicks. In this matter, Bayer approached the Court of the Commissioner of Patents to prevent Clicks from selling a cheaper generic blood thinning tablet called Rivaxored, that was in direct competition with its patented tablet – Rivaroxaban: Patent no 2007/06238.

Bayer was granted a patent for the tablet Rivaroxaban in 2000. Bayer accordingly obtained exclusive control over the product for a period of 20 years. The patent was due to expire in December 2020. In 2007, Bayer changed the dosage of the medication from a twice daily dosage to ‘once a day’ dosage. They claimed that this change in dosage was an ‘inventive step’, and they were successful in obtaining a new patent for the tablet. This consequently extended the expiry of the patent, for another 20 years (from December 2007 to January 2026). This extension was widely criticised by the health fraternity.

After expiry of the initial patent (in December 2020), Dr Reddy’s Laboratories (Pty) Ltd launched generic versions of Rivaroxaban. Dr Reddy’s was a rival company to Bayer and imported generic tablets – Rivaxored into South Africa (SA) and sold it to pharmaceutical wholesalers and retailers, like Clicks, Dis-Chem and Alpha Pharm.

Background and facts of the case

In 2021, Bayer brought a claim against Dr Reddy’s seeking to prevent the distribution and sale of the generic tablets and were successful in obtaining an interim interdict against Dr Reddy’s (Bayer Intellectual Property GMBH and Others v Dr Reddy’s Laboratories (CP) (unreported case no 2007/06238-5, 15-12-2021) (Keightley J)). In terms of the interdict, the court found that Bayer’s patent was prima facie valid, and that the sale of generic Rivaxored in SA constituted a prima facie infringement of the patent. The court held that the continued sale of Rivaxored in SA gave rise to irreparable harm to Bayer.

Despite the interdict granted against Dr Reddy’s, Clicks continued to sell Rivaxored. Bayer accordingly brought the current application before court to prevent Clicks from selling Rivaxored.

Arguments by the parties

Clicks contended that they were not bound by the initial order against Dr Reddy’s and was, therefore, not in contempt. They argued that the (extended) patent granted to Bayer was invalid as it failed to constitute an inventive step, as ‘there [was] nothing exceptional about the new [one] dosage claim’ (para 44).

Moreover, Clicks claimed that Bayer stood to lose only R 3 million in sales based on its current stock levels, and this prejudice was outweighed by the public interest in having access to a cheaper alternative to the patented product (para 65). In other words, they claimed that ‘public interest based on the availability of cheaper generic medicines should outweigh the interests of the patentee’ (para 66).

Bayer conceded that while Clicks was not bound by the order, their conduct undermined the authority of the court, as they showed ‘scant regard for the findings’ of the court by continuing to sell a product, the sale of which was found to be ‘prima facie unlawful’ (para 13).

The court order

Regarding the inventiveness of the patent, Collis J held that this issue was comprehensively dealt with in the Keightley J judgment, and ‘any findings made on the inventiveness of the patent stands until set aside on appeal’ (para 46). In Bayer v Dr Reddy’s, Keightley J found the patent to be prima facie valid.

It is undisputed that Bayer would lose sales as a result of the conduct of Clicks by its continued sale of Rivaxored, and that Bayer would find it difficult to prove the full extent of its losses to successfully launch a damages claim. Clicks argued that Bayer had a statutory right to claim a reasonable royalty in lieu of damages. This same argument was raised and rejected in the Dr Reddy’s application by Keightley J. In terms of prevailing case law: ‘The statutory provision that a royalty may be imposed in lieu of damages is an option available to a plaintiff. It is not an invitation to infringers to become de facto licensees’ (Pfizer Ltd and Another v Cipla Medpro (Pty) Ltd and Others 2005 BIP 1 (CP)). ‘Nor is it an answer to its claim for an interdict that an [IP holder] might be awarded a reasonable royalty as an alternative to damages. That is a remedy available at the option of a patentee and it cannot be compelled in effect to licence the use of its patent’ (Cipla Medpro (Pty) Ltd v Aventis Pharma SA and Related Appeal 2013 (4) SA 579 (SCA)).

The court also rejected the argument that public interest in obtaining availability to a cheaper alternative, outweighed the interest of the patentee. Collis J found ‘that the protection of a patent will also serve the public interest’ (para 67). ‘The marginal harm to a small percentage of patients in the private sector (who don’t have medical aid or who have to make a small co-payment) was not considered to be sufficient to outweigh the negative public interest effect of failing to enforce valid patents’ (para 70).

Accordingly, the balance of convenience favoured Bayer and that they were granted an interim interdict.

Comments

There were some key points for discussion from the Bayer v Clicks case.

Licences

In both the Dr Reddy’s and Clicks cases, it was contended that a licence or royalty could be offered as a remedy to Bayer, in lieu of damages. The court in both cases confirmed that this was an option electable by the patent holder, and not the infringer. Such an option could not be imposed on the patent holder and this remedy was not an invitation for infringers to become licensees. In other words, the courts confirmed that a licence cannot be forced on the patent owner as a remedy for infringement.

Evergreening and constitutionalism

In part of their argument, Clicks appeared to contend that s 25 of the Patents Act 57 of 1978, was unconstitutional. They, however, failed to take this argument any further to support this with any evidence (paras 48-49). Section 25 essentially permits ‘evergreening’. Evergreening is a technique used by some patent owners, in particular pharmaceutical companies, to extend the lifetime of a patent. Dr Reddy’s and Clicks both argued that the (extended) patent granted to Bayer was invalid as the change in dosage lacked any inventiveness (indirectly implying that this was contra bonos mores and unconstitutional as it unfairly extended the monopoly of a patent). In the Dr Reddy’s case, the court, however, confirmed that the (extended) patent was prima facie valid and worthy of protection. It is unfortunate that Clicks did not take their argument, in respect of evergreening, further as it would have given clarity to the issue of evergreening, and the balancing of public health and welfare rights against patent rights.

Nevertheless, the court unequivocally confirmed the rights of a patentee, and found that any minor prejudice suffered by public health would not be enough to outweigh the rights of a patent holder. The monopoly given to the patentee of medication ensures that the ‘public interest is served by ongoing research and development. This principle underpins the protection of patents … law’ (Bayer v Dr Reddy’s Laboratories at para 98).

The question, however, must be asked – how does one balance the rights of public health and the patent owner, and under what circumstance, if any, will public healthcare outweigh patent rights?

Professor Ciresh Singh LLB LLM PhD (Law) (UKZN) is a Law Professor at the University of South Africa.

This article was first published in De Rebus in 2023 (Sept) DR 31.

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