In This Issue

Indian Patent Office Grants First Compulsory License To

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Indian Patent Office Grants First Compulsory License To


Indian Patent Office has made remarkable decision by granting Compulsory License in favour of Natco Pharma Limited with condition that licensee has to pay royalty at the rate of 6% of the net sales of the drug on a quarterly basis to Bayer Corporation (Licensor).

Compulsory License (CL) is considered as an involuntary contract between a willing buyer and an unwilling seller. This CL is imposed and enforced by the state.

Bayer Corporation invented a drug called 'Sorafenib' (Carboxy Substituted Diphenyl Ureas) which is useful in the treatment of advanced stage Hepatocellular Carcinoma-HCC (liver cancer) and Renal Cell Carcinoma-RCC (kidney cancer). The compound is covered by Patent No.215758. Patentee launched it in 2005 under the trade name “Nexavar”. The drug is not a life-saving drug, but a life extending drug.

Natco Pharma Limited applied for CL on July 29, 2011, after request for voluntary license was not materialized. In CL application they proposed to sell the drug at a price of Rs.8800/- (approximately USD 172) for one month therapy as compared to the price of about Rs.2,80,428/- (approximately USD 5,484), which was being charged by the Patentee.

As per the Form 27, (in which patentee has to submit a statement regarding working of Patented invention in India), the Patentee did not import drug in 2008, while in 2009 and 2010 the Patentee imported in small quantities. The quantities imported by the Patentee prima facie appeared to be grossly inadequate and satisfied requirement to consider CL application.

The controller has examined three substantial issues in CL Application [U/S 84(1) (a, b and c)], i.e. whether,

a. the reasonable requirements of the public with respect to the patented invention have not been satisfied.

b. the patented invention is not available to the public at a reasonably affordable price.

c. the patented invention is not worked in the territory of India.

Detail filled in Form 27 has played an important role in deciding whether the reasonable requirement of the public has been satisfied or not. It is noted that the Patentee had made available the drug only to a little above 2% of the eligible patients. The patentee could not discharge the obligation by stating that the patentee and an alleged infringer M/s. Cipla cumulatively fulfill reasonable requirement.

The 'reasonably affordable price' cannot be interpreted as reasonable to public and patentee. During the last four years the sales of the drug by the Patentee at a price of about Rs.2,80,000/- (approximately USD 5,477) (for a therapy of one month) constitute a fraction of the requirement of the public and logic is that price was not reasonably affordable to public. However, the controller agreed with patentee’s submission that affordable to public is required to be considered as affordable to different classes/sections of public.

It is stated in decision that a patentee failed to achieve ‘Worked in the territory of India’ requirement by either manufacturing the product in India or by granting a license to any other person for manufacturing in India. 'Worked in the territory of India' implies manufactured in India to a reasonable extent so that the principles enumerated in Section 83 can be brought into effect. In the absence of manufacturing in India, Section 83 will be a dead letter.

The request of the patentee to adjourn application for compulsory license has also rejected as sufficient time was elapsed since the grant of patent and no prompt action was taken by the Patentee to start the working of invention in India.

On fulfilling requirements for CL, the Indian Patent Office has granted CL to Natco Pharma Limited with condition to pay royalty and supply the drug covered by the Patent to at least 600 needy and deserving patients per year free of cost.

This decision has created controversy as on one end it is welcomed by Indian Pharmaceutical Industry on other end it is criticized by MNC. However, the battle is not ended yet.

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   Contributed by : Ms. Nilam Gadani - Patent Attorney
   Designed By : Vikash Singh

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