Yesterday, we reported that the Indian Patent Office has rejected an application for Compulsory License. Here’s our take on it.
Case: C.L.A.No. 1 of 2013
Parties: M/s. BDR Pharmaceuticals International Pvt. Ltd. Vs. M/s. Bristol Myers Squibb Company
Forum: The Controller of Patents, Patent Office Mumbai
In this case, the Applicant had filed an application for a compulsory license for patent number 203937 titled “A compound 2-amino-thiazole-5-carboxamide”. The patent was granted on 16th November 2006 and covered the active pharmaceutical ingredient DASATINIB which is used to treat patients with Chronic Myeloid Leukemia (CML). The patentee sold a drug (which includes the patented ingredient) under the brand name SPRYCEL. The Applicant stated that the patentee had priced each tablet at 2761/- INR, which worked out to 19,88,160/- INR per patient annually (based on the normal prescribed dosage).
The Applicant had applied for a voluntary license with the following conditions:
- The drug will be made available to the public at a proposed price of 135/- INR per tablet working out to 97,200/- INR annually
- Product under license shall be manufactured with indication for CML
- Royalty will be paid to the patentee as per the rate fixed by the Controller
- Special care will be taken to make the patented product available to patients who are economically weak and also to the patients residing in remote and rural areas
- The drug will be offered free of cost to a certain percentage of patients suffering from CML as determined by the cancer specialists.
The Applicant also highlighted that the patentee has filed an infringement suit against the Applicant before the High Court of Delhi. The Applicant submitted that the above suit was being adjourned over the last four years and that the patentee was indulging in delaying and blocking tactics.
The Applicant also pointed out that even six years after the grant of patent, the patentee was primarily importing the drug. The Applicant also highlighted its suitability as a “person interested” as the Applicant is into manufacturing, distributing and exporting pharmaceutical active ingredients and the Applicant’s manufacturing facilities are approved under WHO’s GMP (Good Manufacturing Practice).
The Applicant sent a letter, dated 2nd February 2012, to the patentee requesting for a voluntary license for manufacturing the patented ingredient. Within a month, the patentee replied to the Applicant’s letter and raised certain queries such as “facts which demonstrate an ability to consistently supply high volume of the patent drug”, “facts showing your litigation history or any other factors which may jeopardize Bristol-Myers Squibb’s market position”, and so on. The Applicant interpreted the patentee’s reply to be clearly indicative of the rejection of the voluntary license and did not pursue the matter further and made no effort to arrive at a mutual settlement with the patentee.
After a year, in March 2013, the Applicant filed the application for a compulsory license. The Applicant was informed in May 2013 that they had failed to make a prima facie case for the grant of compulsory license as the Applicant has not acquired the ability to work the invention to the public advantage’, in the absence of the requisite approval from the DCGI. The Controller had also noted that the Applicant has also not made efforts to obtain a license from the patentee on reasonable terms and conditions. The Applicant was also informed that a request for being heard is required be filed within one month from the date of said order failing which the application shall be refused. The Controller had also noted that “More than four and a half months remained un-utilized out of the Reasonable period” prescribed by the legislature for the purpose of mutual agreement but the Applicant had opted not to take any action during this precious time period that was available with the Applicant.
In response, the Applicant submitted that by not specifically replying to the request for voluntary license, the patentee can continue to correspond asking for more and more information and keep the request for voluntary license in suspension. This amounted to unfair exploitation of the provisions of Section 84 by the patentee. The Applicant also alleged that the patentee can also use the information sought from the Applicants Against the applicants themselves in ongoing suits for patent infringement.
The Controller opined that if the patentee avoids to specifically reject the request for voluntary license or does not address the terms for grant thereof, the application for compulsory license cannot be said to be indefinitely delayed for want of specific denial from the patentee, unless the Controller exercises his powers in appreciating the efforts made by the Applicant towards fulfilling the requirements of Section 84. The Controller found the Applicant’s contention that the application for compulsory license can be indefinitely delayed for want of specific denial from the patentee is misplaced. The Controller noted that as per the Act, the patentee can prevent a prospective applicant for a maximum period of six months from making an application for compulsory license.
The Controller also noted that though the Applicant alleged that the patentee, though its queries, was attempting to extract information from the Applicant, the Applicant had failed to highlight any query that would jeopardize his position either before the Controller or before other forums. The Controller noted that the Applicant had concluded that the patentee had no intention to provide a voluntary license as 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. The Controller opined that such statements of the patentee in a journal cannot be taken as evidence against the patentee in the present case. Further, the opinion of the patentee’s attorney did not relieve the Applicant of his obligation under the Act to sincerely negotiate the terms for voluntary license for a reasonable period. The Controller stated that the Applicant had not at all demonstrated reasonable efforts as the Applicant had not even bothered to reply to the queries of the patentee.
The Controller also noted that though the Applicant argued that the reasonable period should not exceed six months, the Applicant waited till almost a year before proceeding to file an application for a compulsory license.
The Controller opined that the legislature was fully aware that while a patentee may try to prolong the process of mutual deliberations by raising unnecessary queries, the patentee was also entitled to satisfy himself regarding the credentials and capability of the applicant for a voluntary license as well as the terms and conditions. The decision to grant a voluntary license, particularly on a 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 Applicant raised a contention that Section 84(6) specifically bars the Controller from considering any measures taken by the patentee subsequent to the making of the Application and that the intention of the legislature appears to be that subsequent measures by the patentee to frustrate the proceedings shall not be considered. It was argued that in view of the above this restrictive clause is applicable only to the patentee. In this case, the Controller noted that the provision stated that the Controller is not required to take into account matters subsequent to the making of the application of compulsory license but does not bar the Controller from doing so.
The Controller noted that in the present case, the parties are engulfed in litigation. If the Controller follows the Applicant’s argument, an undue advantage shall be available to the Applicant seeking a compulsory license as the Applicant may file an application for compulsory license and simultaneously enter into negotiations with the patentee. In such a case, the applicant would always have an undue advantage and the patentee will always be prejudiced, which is against the underlying intent behind Section 84.
Application for compulsory license was rejected.
The Controller’s decision makes it crystal clear that there can be no issue of Compulsory License unless the Applicants have made sincere efforts over a reasonable time period to obtain a voluntary license.
The well-reasoned order of the Controller will go a long way in pacifying the apprehensions of the pharmaceutical industry who felt that all their patents, in India, were under a constant threat of a compulsory license.