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India issued its first CL last year for a Bayer’s kidney liver cancer drug Nexavar to an Indian generic manufacturer Natco on all three grounds of section 84 (1) including a reasonable requirement of public not being met, non-availability of the drug on affordable prices, and non-working of the invention in the territory of India. This decision by the Indian government that lead to the issuing of CL encouraged more domestic generic manufacturers to go ahead with filing more CL applications for patented drugs.
The term compulsory license is used to describe a number of mechanisms for non – voluntary authorizations to use patents. The most important global norm for the use of compulsory licenses is Article 31 of the WTO TRIPS Agreement, which addresses uses “of a patent without the authorization of the right holder, including use by government or third parties authorized by the government.
Recently, the Controller General of Patents (hereinafter Controller) in India has rejected BDR Pharmaceuticals Pvt. Ltd.’s application for CL for Bristol Myers Squibb’s (BMS) cancer drug SPRYCEL. SPRYCEL is a brand name in which the active pharmaceutical ingredient is DASATINIB, used by patients with Chronic Myeloid Leukemia which is covered in patent number IN203937. The drug has received Orphan Drug Status in the USA, Europe, and Switzerland. The Controller rejected the compulsory license application made by BDR for stating that BDR has failed to make out the prima facie case for the making of an order under section 87 of the Act.
BDR had requested for the compulsory license of DASATINIB on March 4, 2013. BDR claimed that DASATINIB is a suitable chemotherapeutic option for the treatment of Chronic Myeloid Leukemia and is prescribed when a patient is resistant or develops resistance to the drug IMATINIB, in view of the improved tolerance and efficacy of the drug. BDR Pharmaceutical also submitted that the price of each tablet sold by the patentee is INR 2761/- which works out to INR 1, 65,680/- for 60 tablets per month per patient and about INR 19, 88,160/- per year per patient. BDR on the other hand submitted that it will make the drug available to the public at a proposed price of Rs. 135/- per tablet which will work out to Rs. 8100/- per month for the treatment of Chronic Myeloid Leukemia patient and moreover the drug will be offered free of cost to a certain percentage of patients suffering from Chronic Myeloid Leukemia as determined by the cancer specialist.
BDR Requested for Voluntary Licence
In the present case, BDR sent a letter dated 2nd February 2012, to BMS requesting for a voluntary license for manufacturing DASATINIB in India.
In response to BDR’s letter, BMS raised certain queries by their letter dated 13th March 2012 such as “facts which demonstrate an ability to consistently supply a high volume of the API, DASATINIB, to the market”, “facts showing your litigation history or any other factors which may jeopardize Bristol Myers Squibb’s market position”, “quality-related facts and in particular compliance with local regulatory standards and basic GMP requirements”, “quality assurance systems due diligence”, “commercial supply teams”, “safety and environmental profile”, “risk of local corruption”.
BDR took this reply of Bristol Myers Squibb as ‘clearly indicative of the rejection of the application for voluntary license’ and did not pursue the matter and made no further effort to arrive at a settlement and made an application of compulsory license on 4th March 2013.
Notice of Prima Facie Case not being made out
After a review of the BDR’s CL application by the Controller, a notice was issued stating that a prima facie case was not being made out for the making of an order under Section 84 of the Act as ‘the applicant has not acquired the ability to work the invention to the public advantage’, in the absence of the requisite approval from DCGI, and ‘the applicant has also not made efforts to obtain a license from the patentee on reasonable terms and conditions’. BDR filed a request for hearing with the Patent Office on May 13, 2013.
BDR’ Arguments and Controller’s Decision
In the hearings fixed by the Controller, BDR submitted that by not specifically replying to the request for a voluntary license, the patentee could have continued to correspond asking for more and more information and kept the request for a voluntary license in abeyance. Moreover, the patentee could have also used the information sought from the applicants against the applicants themselves in ongoing suits for patent infringement.
BDR further argued that if the patentee avoids specifically rejecting the request for a voluntary license or does not address the terms for grant thereof, the application for a compulsory license could be indefinitely delayed for want of specific denial from the patentee, unless the Ld. The controller exercises his powers in appreciating the efforts made by the applicant towards fulfilling the requirements of Section 84(6)(iv). In considering the application filed under this section, the Controller shall take into account,—
(iv) as to whether the applicant has made efforts to obtain a license from the patentee on reasonable terms and conditions and such efforts have not been successful within a reasonable period as the Controller may deem fit.
The Controller stated that the contentions of the applicant are misplaced and ‘explanation’ to Section 84(6) of the Patent Act, 1970, clarifies beyond doubt that a patentee cannot indefinitely prevent an applicant for a voluntary license from making an application for a compulsory license under Section 84 of the Act. At the most, if at all, the patentee can prevent a prospective applicant for six months from making an application for a compulsory license.
The Controller further stated it is evident from the proceedings that the applicant realized his mistake and thereafter tried hard to somehow justify the inaction of not replying at all to the letter of the patentee dated 13th March 2012 due to which these submissions can only be termed as an afterthought.
BDR also contended that to the utter surprise of the applicant, in the April 2012 issue of ‘Indian Business Law Journal’, the attorney for the patentee publicly declared that the strategy on behalf of the patentee was ‘to keep the potential licensee of a compulsory license engaged without a clear outright rejection’ and continue with fresh queries. This leads the applicant to conclude that there would be no purpose in responding to the said letter of the patentee seeking more information because any response on the part of the applicant would have been treated by the patentee on these lines or in the same manner as publicly stated by their attorney.
On this contention made by the applicant, the Controller stated that the applicant ought to have appreciated that a statement/opinion given by the attorney of the patentee in a journal cannot be taken as evidence against the patentee in the present case.
On BDR’s arguments on ‘reasonable period,’ the Controller stated that if the applicant really believed that the ‘reasonable period’ is something less than ‘six months’ why did he not take action in accordance with his beliefs. That is, after making an offer on 2nd February 2012 to the patentee and after receiving the patentee’s reply dated 13th March 2012, why did the applicant wait till 4th March 2013 to file the present application.
Moreover, the Controller stated that the term ‘efforts’ is not accompanied by the qualifying term ‘reasonable’ and the applicant ought to have appreciated that the duty cast upon the applicant to make ‘efforts’ is absolute and inflexible and without exceptions.
The Controller also stated that the decision to grant a voluntary license, particularly on as subject matter covered by a patent, is an important decision for a patentee. While it is possible that some of the queries raised by the patentee may not be strictly reasonable, it is natural that the patentee may seek additional information from the requesting party to satisfy himself about the credentials and capability of the said party. The Controller held that the applicant did not make efforts to obtain a license from the patentee on reasonable terms and conditions.
The applicant sought to argue that the three substantive requirements under section 84(1) namely, (a) non-satisfaction of reasonable requirements of the public, (b) non-availability at a reasonably affordable price, and (c) not worked in the territory of India, have been met singularly and independently satisfied by the applicant due to which any irregularity in procedure/timeline may be either waived or condoned or declared to be not applicable.
The Controller however stated that the stage for making a ruling on the applicability of the grounds of Section 84 on merits has not yet arrived. The Controller further held that the deliberate intent on part of the applicant to refrain from entering into any kind of dialogue with the patentee for the purpose of securing the grant of a voluntary license, and the exercise of a deliberate choice to only invoke the provisions relating to compulsory licenses without taking the requisite steps laid down by the law, cannot be classified as an ‘irregularity in procedure/timeline’, which can be waived or condoned or declared to be not applicable.
The controller thus held that a prima facie case for issuing a CL under Section 87 is not made out and rejected the application of CL.
Last year India bore the brunt of issuing CL to Bayer by the Global MNCs alleging that India’s patent decisions side with the domestic generic industry. However, the current decision clearly indicates that decisions relating to compulsory licensing would be judiciously based on the merits of the case and patent rights would be lawfully protected. It is to be seen whether this decision will be challenged by BDR at IPAB or not.
About the Author: Ms. Harsha Rohatgi, Patent Associate, Khurana & Khurana, Advocates, and IP Attorneys and can be reached at firstname.lastname@example.org