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High Court of Judicature at Bombay
MOHIT S. SHAH & M.S. SANKLECHA, JJ.
Bayer Corporation United States of America
Versus
Union of India through the Secretary Department of Industrial Policy & Promotion & Others
Writ Petition No. 1323 of 2013
Decided on : 15-07-2014
The Court held that the grant of Compulsory License to Natco under Section 84 of the Patent Act 1970 (the Act) by the Controller of Patents (Controller) and upheld by the Intellectual Property Appellate Board (Tribunal) was completely without jurisdiction. The condition precedent to entertain any application for Compulsory License under Section 84(1) of the Act, is that the applicant before the Controller should have made efforts to obtain voluntary license from the patent holder under Section 84(6)(iv) of the Act on reasonable terms and conditions. In this case, the applicant has not made efforts to obtain a voluntary license before applying for Compulsory License under Section 84(1) of the Act. The communication dated 6 December 2010 does not indicate any efforts made by M/s. Natco to obtain a voluntary license but appears in the form of notice, if not a threat, to grant voluntary license. Therefore, on the aforesaid short ground alone the impugned order be set aside for failure to satisfy the condition precedent for grant of Compulsory License.
Fact of the Case:
The petitioner is a corporation incorporated under the laws of United State of America (USA). Consequent to its research and development (R & D) activities the petitioner invented and developed its patented drug Sorafenib Tosylate (compound of Carboxyaryl Substituted Diphenyl Ureas) sold under brand name Nexavar (patented drug). The patented drug is used in the treatment of patients suffering from Kidney cancer i.e. Renal Cell Carcinoma (RCC) and liver cancer i.e. Hepatocellular Carcinoma (HCC). The aforesaid invention of the patented drug was done in USA. The patented drug is for treatment of Cancer of RCC and HCC. However, as the people suffering in America from the aforesaid cancer of RCC and HCC are rare/few i.e. less than 2,00,000 patients, the patented drug is classifiable as 'Orphan drug' in U.S.A. On classification of the patented drug as ‘Orphan drug’, in U.S.A. 50% of the amount spent by the petitioner on research and development of the patented drug is reimbursed to the petitioner by the Government of U.S.A.
Finding of the Court:
The Court held that the grant of Compulsory License to Natco under Section 84 of the Act by the Controller and upheld by the Tribunal was completely without jurisdiction. The condition precedent to entertain any application for Compulsory License under Section 84(1) of the Act, is that the applicant before the Controller should have made efforts to obtain voluntary license from the patent holder under Section 84(6)(iv) of the Act on reasonable terms and conditions. In this case, the applicant has not made efforts to obtain a voluntary license before applying for Compulsory License under Section 84(1) of the Act. The communication dated 6 December 2010 does not indicate any efforts made by M/s. Natco to obtain a voluntary license but appears in the form of notice, if not a threat, to grant voluntary license. Therefore, on the aforesaid short ground alone the impugned order be set aside for failure to satisfy the condition precedent for grant of Compulsory License.
Issues: 1. Whether the applicant (Natco) made efforts to obtain voluntary licence from the Patent holder (Bayer)? 2. Has the reasonable requirements of the public been satisfied? 3. Was the patented drug available to the general; public at reasonably affordable price? 4. Has the Patented Drug been worked in the territory of India? 5. Whether the application for compulsory licence ought to have been adjourned by the Controller? 6. Terms & Conditions for grant of compulsory licence
Ratio Decidendi: 1. The Court held that the second condition precedent for consideration of application for compulsory licence namely an effort to obtain a voluntary licence has been satisfied by Natco. Therefore the consideration of the application by Natco for grant of Compulsory Licence to the Controller cannot be faulted nor the impugned order can be faulted on the above ground. 2. The Court held that the reasonable requirement of the public under Section 84(1)(a) of the Act is not satisfied even if one accepts the figures of the petitioner. 3. The Court held that the patented drug is not available to the public at a reasonably affordable price. Thus attracting Section 84(1)(b) of the Act to the present facts. 4. The Court held that the patented drug had been worked in the territory of India by importation of the same. Consequently, the grant of compulsory licence on the above account was not sustainable. 5. The Court held that there is no merit in the petitioner's submission that the application for compulsory licence ought to have been adjourned by the Controller. 6. The Court held that the royalty being fixed at 7% of the net sale of Natco in respect of the patented drug is adequate.
Final Decision: The Court dismissed the petition and held that there shall be no order as to costs.
M.S. Sanklecha, J.
1) This petition under Article 226 of the Constitution of India challenges the order dated 4 March 2013 passed by the Intellectual Property Appellate Board (Tribunal). By the impugned order the Tribunal upheld the order dated 9 March 2012 passed by the Controller of Patents (Controller) granting Compulsory License to M/s. Natco Pharmaceuticals Limited (Natco) under Section 84 of the Patent Act 1970 (the Act). This compulsory licence was in respect of the petitioner's patented invented drug Sorafenib Tosylate (compound of Carboxyaryl Substituted Diphenyl Ureas) sold under brand name Nexavar (patented drug).
2) This petition arises out of orders granting a compulsory license of the patented drug owned by the petitioner to Natco on application of the provisions of Chapter XVI and in particular Section 84 of the Act. The challenge of the petitioner is to the allowing of the application of Natco for compulsory licence and to the manner in which Chapter XVI of the Act and in particular Section 84 of the Act has been applied. We are informed at the Bar that it is for the first time after India became a signatory to Trade Related Aspects of Intellectual Property Rights (TRIPS) followed by the Doha Declaration in 2001 and the amendments to the said Act in 2003 and 2005 that the issue of compulsory licence has arisen for consideration before the authorities under the said Act and consequently also before this Court. The result of the examination of Chapter XVI of the Act and the manner of its application by the authorities under the Act would have far reaching impact as it would govern the issue of grant of compulsory license in respect of patented drugs.
I) Factual background
3) The bare facts necessary to consider the challenge in this petition are as follows:
a) The petitioner is a corporation incorporated under the laws of United State of America (USA). Consequent to its research and development (R & D) activities the petitioner invented and developed its patented drug to enable its administration to human beings. The patented drug is used in the treatment of patients suffering from Kidney cancer i.e. Renal Cell Carcinoma (RCC) and liver cancer i.e. Hepatocellular Carcinoma (HCC). The aforesaid patented drug acts more as a palliative i.e. relieves patients from pain and to an extent also slow down the spread of cancer by restricting the speed with which the cancer cells grow.
b) The aforesaid invention of the patented drug was done in USA. The patented drug is for treatment of Cancer of RCC and HCC. However, as the people suffering in America from the aforesaid cancer of RCC and HCC are rare/few i.e. less than 2,00,000 patients, the patented drug is classifiable as 'Orphan drug' in U.S.A. On classification of the patented drug as “Orphan drug”, in U.S.A. 50% of the amount spent by the petitioner on research and development of the patented drug is reimbursed to the petitioner by the Government of U.S.A.
c) On the successful invention of the patented drug in 1999, the petitioner applied for a patent in U.S.A. Thereafter, on 12 January 2000 the petitioner applied for an international patent under the Patient Cooperation Treaty (PCT) and on 5 July 2001 applied in India for grant of the patent to the patented drug in India. On 3 March 2008 the office of the Controller granted the petitioner's application dated 5 July 2001. This patent granted in India on 3 March 2008 corresponded to the patent granted to this patented drug in over 45 countries of the world.
d) As a consequence of being granted a patent, the petitioner had exclusive right to make/manufacture, use and sell the patented drug either by itself or through its licensee to the exclusion of all others for a period of 20 years from the date of its application. Thus, the petitioner had exclusive right to prevent third parties from making/manufacturing, using, selling or importing the patented drug in India without the petitioner's permission/licen
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