11 May 2012

Compulsory licensing

'India's first compulsory licence over Bayer's patent' by Betsy Vinolia Rajasingh in Journal of Intellectual Property Law & Practice (2012) discusses Natco Pharma Ltd v Bayer Corporation—Compulsory Licence Application No 1 of 2011, the first grant by India's Controller of Patents of a compulsory licence under s 84(1) of the Indian Patents Act 1970.

The compulsory licence decision [PDF] in Natco allows generic drug manufacturer Natco Pharma Limited to use Bayer's Sorafenib pharma patent on grounds of 'non-fulfilment of reasonable requirements of public with respect to the patented invention, non-availability of the drug at a reasonably affordable price, and non-working of the invention in India'.

Rajasingh comments that -
Section 84(1) encompasses the law relating to compulsory licensing. Provisions on compulsory licensing, including section 84(1), were enacted by the Patent (Amendment) Act 2002, which replaced earlier compulsory licensing provisions, in order to facilitate Indian patent law's compliance with the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) under the World Trade Organization to which India is a signatory. 
Section 84(1)(a), (b), and (c), on which the issues contested in Natco are based, authorizes any interested person to make an application to the Controller of Patents following the expiry of 3 years from the date of grant of patent alleging that the patentee has not satisfied the reasonable requirement of the public with respect to the patented invention;  made available the patented drug at a reasonably affordable price; or worked the patented invention in India.
Sorafenib potentially extends the life of kidney cancer patients by 4 to 5 years and liver cancer patients by 6 to 8 months. Bayer's US patent application dates from 1999, with an Indian application in 2001 and grant in 2008.  Two years later Natco sought a voluntary licence from Bayer,  proposing to market the drug at a huge discount on Bayer's price. Bayer rejected the voluntary licence proposal, with Natco waiting on the statutory three years and applying for a compulsory licence.

The Controller of Patents considered Bayer's non-fulfilment of requirements under s 84(1)(a), (b) and (c). Rajasingh notes that the Controller concluded that the size of the Indian market was significantly higher than Bayer's estimated 8,842 patients and that the quantity of drugs imported by Bayer imported would have only catered to the therapeutic needs of 2% of the assumed 8,842 patients. Bayer's importation had been in negligible quantities following the grant and failure to manufacture in India  indicated Bayer's default in fulfilling the ‘reasonable requirement of the public’ under section 84(1)(a). Demand for Sorafenib had not been met to an adequate extent or on reasonable terms.

Rajasingh comments that
Bayer asserted that a ‘reasonably affordable price to the public’ under section 84(1)(b) of the Act implied reasonableness with reference to the general public and the patentee: Bayer, as patentee, had invested substantial capital in research, development, and manufacture of the drug. Rejecting Bayer's claim, the Controller endorsed Natco's view that reasonableness contemplated under the Act refers solely to the public and not to the patentee as well 
.... the mere importation of a patented invention does not entail forfeiture of the patent but something of lesser import such as the issuance of a compulsory licence. Moreover, Article 5(A)(2) of the Paris Convention states that the abuse of patent rights, for instance by failure to work the invention, might be prevented by enacting laws on compulsory licensing. Article 5(A)(2), via Article 2(1) of TRIPS which underpins the requirement that member countries comply with provisions of the Paris Convention, is therefore the foundation for compulsory licensing provisions under the Act. 
The Controller also relied on section 83 of the Act to decipher the overriding legislative policy behind the provisions relating to compulsory licensing found in section 84. Section 83, in view of preventing abuse of patent rights, mandates restraint on gaining a monopoly by importation, since it can be an impediment to trade and international technology transfer. Applying this rationale in section 83, the Controller established that working in India, as mentioned in section 84(1)(c), essentially means manufacturing in India and not mere importation into India. Further, referring sections 84(6) and 90(2), which disallows a licensor from importing the patented invention but requires manufacturing the same within India in order to work the invention, he emphasized that the same logic must apply to a patentee as well. 
Considering that Bayer had manufacturing units in India for drugs, including cancer drugs, yet refrained from neither worked nor even intended to work the invention in India for 4 years following the patent grant, the Controller held that Bayer had failed to comply with section 84(1)(c).