On March 9 2012, the Controller General of Patents Chaitanya
Prasad ruled against German pharmaceutical company Bayer
Corporation by granting a compulsory licence to Hyderabad-based
Natco Pharma. This licence is to produce Bayer's patented drug
'Sorafenib tosylate', which is sold by Bayer under the name
Nexavar and is used for the treatment of kidney and liver
Under the terms of the compulsory licence, Natco will pay
royalties to Bayer at a rate of 6% of net sales on a quarterly
basis, sell the drug at no more than Rs 8,880 (US$172), and
supply the drug free of cost to at least 600 needy patients
The right of local producers to a compulsory licence is
stated under Section 84 of the 1970 Indian Patents Act. The Act
states that a party that is capable of producing an invention
can approach the Controller of Patents to apply for such a
licence should the patent holder refuse to grant the licence to
the party. However, this is the first time that the relevant
section of the Patents Act has been tested.
Profitability versus public sentiment
A compulsory licence can be granted if, after a period of
three years from grant of the patent, the patentee has not been
able to: (1) meet the reasonable requirements of the public
with respect to the patented invention; (2) make the patented
invention available to the public at a reasonably affordable
price; or (3) work the patented invention in the territory of
Lall Lahiri & Salhotra partner Rahul Chadhury says the
application by Natco was filed invoking all three grounds
stated above. Bayer was granted a licence to import and market
the drug in India on August 1 2007, but it did not import the
drug in 2008 and only imported a minimal amount in 2009 and
However, Bayer argued that it could not expand its
distribution of the drug in India because another
pharmaceutical company, Cipla, sold a similar drug [Bayer is
suing Cipla for infringement].
A one year course of Nexaver costs approximately Rs 3.4
million (US$69,000). Such a figure equates to 41 times the
projected average per capita income for India in 2012. Natco,
however, said that it could sell the same course of the drug
for Rs 106,800 (US$2,160).
The decision by the Patents Office is expected to encourage
similar actions from other domestic pharmaceutical companies.
At the moment, there are at least two other pending voluntary
licence applications: between Natco and a GSK-Pfizer joint
venture; and between Cipla and US-based Merck & Co.
Michele Childs, director of policy and advocacy for the MSF
Access Campaign, says: "This decision serves as a warning that
when drug companies are price gouging and limiting availability
there is a consequence. The Patent Office can and will end
monopoly powers to ensure access to important medicines."
The compulsory licence provision is not specific to India.
It has been legitimised under the WTO's agreement on
intellectual property – the Trade-Related Aspects of
Intellectual Property Rights Agreement (or TRIPs) –
and has been granted in jurisdictions such as Thailand, Brazil
and South Africa.
Many legal commentators say they do not see domestic bias in
the regulator's decision. Remfry & Sagar patent partner
Ranjina Mehta-Dutt says: "It is clear in this case that Bayer
has invoked all of the three grounds stated in the long existed
Patents Act for granting a compulsory licence. Bayer has been
given sufficient time to comply with the standards of the
Patent Office, yet there has been minimal effort spent to
increase accessibility and availability of its drug before the
compulsory licence is granted. It is very doubtful that Bayer
would have taken any sincere action in the near future.
Therefore, to a certain extent, the Patent Office's decision is
legitimate and comprehensive."
The decision of the Patent Office means that patent holders
will need to balance profitability with ensuring sufficient
accessibility to their life-saving products. Multinational
patent holders with a long-term interest in the Indian market
are advised to accommodate such public sentiment in their
|Making an impression
In its annual review of the 50 most
influential people in intellectual property, Managing
IP magazine has this year included IPAB chairman Prabha
Every year, Managing IP lists what it considers to
be the most influential people in the world of
intellectual property, and every year there are
surprises. This year, new entries include Kim Dotcom,
The Pirate Party and Michael Jordan, plus several from
China – demonstrating that country's rising
importance to the future of IP.
Managing IP also ranked the top 10 in order for the
first time. This adds an extra dimension to the list,
comparing the different roles of companies, politicians
and IP offices, and the hope is that it will stimulate
some debate. If you want to take part in that
discussion, please comment on the stories online at
www.managingip.com or join the magazine on LinkedIn or
Twitter (#MIP50). There is no nomination or voting
process for the Top 50, which is compiled by Managing
IP journalists in London, New York and Hong Kong. But
Managing IP will certainly bear suggestions in mind for
Prabha Sridevan, Intellectual Property Appellate
Board of India
Prabha Sridevan was appointed chairman of the
Intellectual Property Appellate Board on September 5
2011 after serving as a judge on the Madras High Court
for 10 years. She has quickly made her imprint on IP
practice in India.
In the past year, she has ruled on a number of
noteworthy cases, such as Yahoo v Controller and
Rediff, holding that business methods are not
patentable in India, and Tata v Unilever, invalidating
Unilever's water-filter patent for failure to file
Section 8 disclosures. She was also the sitting judge
on Financial Times v Times Publishing House, where she
invalidated the British newspaper's trade mark.
Sridevan is also expected to speed up and clear the
backlog at IPAB, which is very welcome among IP owners.
A number of attorneys have commented on her hesitance
to grant unwarranted time extensions, as well as her
willingness to speed up hearings when both sides work
quickly and act in good faith. She has also
aggressively lobbied for additional resources for
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