No Compulsory License without reasonable efforts for a Voluntary License: IPO

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

Facts:

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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.

Analysis

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.

Decision:

Application for compulsory license was rejected.

Takeaways

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.

Patent Rules Amended 2013

As reported here, the Department of Industrial Policy and Promotion (DIPP) has recently published the amended Patent Rules 2013. High on heels after announcement of Indian Patent Office (IPO) as International Search Authority (ISA) and International Preliminary Examining Authority (IPEA), through an Extraordinary Gazette of India, announcement of amended rules have been published by the Ministry of Commerce and Industry.

Over the development of the Indian Patent Regime, Indian Patent Rules (Rules), after being introduced in 1972, were first amended in 2003 when India was moving forward to complying with its TRIPs obligations. Almost a decade later, after being designated as ISA and IPEA, DIPP has again revised the Rules to align its practices with the practices of World Intellectual Property Organization (WIPO).

Amongst the major headers which have seen changes include identification of an appropriate Office, Filing of documents and copies, and definitions provided under chapter III of International Applications under Patent Cooperation Treaty (PCT). Further, amongst new entries are a whole gamut of new rules defining working of the IPO as the ISA and IPEA and, a new fifth schedule.

As per the Rule 4, sub rule (2), an appropriate office once decided in respect of any proceeding under the Act was not allowed to be ordinarily changed. The amended Rules have now allowed for transfer of a Patent application from one branch office to another. Also, it has now been mentioned that any further application referred to in section 16 of the Act has been defined to be filed at the same appropriate office where the first mentioned application was filed. It is believed that by amending the rules of filing of further applications referred in section 16 at the same appropriate office, the examination of divisional applications could be consolidated and the process of handling divisional applications can be streamlined. Further, to provide uniformity, it has also been defined in the new rules that all the divisional applications which have been filed before the enforcement of the new rules, would now be transferred accordingly such that the first mentioned application and its corresponding further application are handled by one branch of the IPO.

Aligning the practice of filing documents with the WIPO, the new rules now have defined new formatting and document presenting criterion. Accordingly, patent applications to be filed with the IPO would now have to include characters of not less than 0.28 cm height and line which are widely spaced and not less than one and a half spaced. Further, apart from numbering of pages at center bottom of each page, documents prepared now will also have to include line numbers at every fifth line of each page including pages of claims. The line numbers have been specified to be included in the left margin of the page which has to be no less than 4 cm.

Applicants filing patent applications relating to nucleotides and sequence listing of amino acids in their patent applications will now have to file such sequence listings in computer readable text format along with the application. While a computer readable format submission has been introduced, submission of print form of these sequences has been dispensed away with.

Definitions included in chapter III of the Rules from now include definition of Examining Authority, International Bureau, and Searching Authority. The Examining Authority has been defined to refer to the Indian IPEA, International Bureau to the International Bureau of the WIPO and, Searching Authority as Indian ISA.

Apart from these changes, few minor changes have been made in Rule 27 and Rule 138. Rule 137 will now read the words “and the abstract” as “the abstract and any other document” while Rule 138 will now read the words and figures “rule 24B” as “Chapter II of these rules, rule 24B”

The major new entries include procedures regarding handling of international applications where IPO acts as the ISA and the IPEA. Amongst starter, the Delhi branch office of the IPO has been made the nodal point of any communication with the International Bureau, any other ISA or IPEA. Regarding the working of the IPO as the ISA and the IPEA, new rules from 19A to 19N have been defined. Briefly, these new Rules from 19A to 19E define the manner in which IPO would act as ISA, including rules defining: Scope of Indian ISA; mode and conditions of Receiving and Transmittal of International Search Reports (ISRs); Time durations during which ISRs are to be prepared by the Indian ISA; Notifications and Rejections for International applications in cases of unity of invention compliance, defects in applications, and situations of no search.

According to the rules, applicants of the international application have also been provided with an option to file for a protest in situations where the Notifications/ Rejections of the Indian ISA have been identified by the applicants to lack merit. However, filing of such protests will attract a protest fee which has been defined in the fifth schedule. Controller has been resided with powers to constitute of a review committee in such situations which would determine the case for which protest has been filed on merits. In case the protest is been found to have merit and is justified, the protest fees is to be refunded to the applicant. This would be one of the first instances where the IPO would provide any refund of any kind to the applicants. J Time duration during which an ISR os to be dispensed has been defined to be either 3 months from the date of receipt of the search copy or, 9 months from the date of priority, whichever is later.

Rules 19 F to 19 N define the manner in which IPO would act as IPEA, including rule defining: Branch Office to act as the IPEA (Delhi Branch Office); time durations of receiving demand and fees payable for such demand; Time durations during which IPERs are to be prepared by the Indian IPEA; Notifications and Rejections for International applications in cases of unity of invention compliance, defects in applications, and situations of no examination. Similar to the rules for filing a protest in respect to Indian ISA decisions and notifications, applicants have also been allowed to file for a protest in situations where they have identified that any decision or notification by the Indian IPEA lacks merit. However, filing of such protests will also attract a protest fee which is again refundable if the protest of found to have merits.

Rules from 19A to 19 N related to Indian ISA and the Indian IPA also include a confidentiality clause consideration under which all maters dealt by the IPO concerning International Applications shall be kept confidential in accordance with the treaty and regulations under the treaty.

To briefly provide an assessment of the fees included in the fifth schedule, a few examples have been listed below. However, the complete fifth fee schedule can be accessed here.

On what Payable

Natural Person
(In INR)

Other than Natural Person
(In INR)

Search Fees 2,500 10,000
Protest Fee 1,000 4,000
Preliminary Examination Fee 2,500 10,000

 According to the now amended Rules, various checks and balances seem to have been put in place to allow the IPO to properly function as ISA and IPEA. However, strict following of the rules and adherence to the same depends upon the IPO, as always!

No International Filing Date Till Grant of Foreign Filing Permit – Delhi High Court

Background

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In this case, the petitioners, on 14th September 2012, filed a PCT application with Indian Patent Office (IPO) at New Delhi being the Receiving Office (RO). The petitioners also simultaneously submitted request for foreign filing permission (Form 25) which the petitioners claimed to be as per the practice of Indian Patent Office.
The petitioners stated that they had written to the PCT Legal Division seeking clarification regarding the validity of the jurisdiction of IPO as RO. One of the confirmations sought was whether the international filing date was independent of the forwarding of the record to International Bureau by the RO. The PCT Legal Division drew the attention of the petitioners to PCT rules and confirmed their understanding.
Thereafter, the petitioners requested the Indian Patent Office to take the application on record and allot the international filing date as 14th September 2012. The IPO alleged that the petitioners had been informed that only one set of documents were received by the IPO (two sets were required as the permission for foreign filing and PCT application are processed separately) and hence, the petitioners were given the option for proceeding with either the PCT application or the foreign filing permission. The IPO alleged that the petitioners had opted for the second option. The petitioners then moved to the Court for relief.

Relief Sought:
The petitioners requested the court to:

  • Direct the respondent authorities to grant the international filing date as 14th September 2012 to the petitioner’s international application and take the same of record by assigning a PCT application number;
  • Direct the respondent authorities to declare that a PCT application filed in India at the Indian Receiving Office (RO/IN) would not require a prior permission under section 39 of the Patents Act, 1970;
  • Direct the respondent authorities to declare the Indian Receiving Office (RO/IN) as the competent receiving office when an Indian resident / national is an applicant of the PCT application filed at RO/IN for at least one of any contracting states.

The Arguments of the Patent Office
The respondents argued that the petitioners did not file international application for patent under PCT and had only filed an application for permission for filing outside India under Section 39 of the Indian Patent Act on Form-25. The respondents highlighted that a resident of India cannot file an application outside India without obtaining the aforesaid permission.

Issues

  • Whether permission under Section 39 of the Patent Act is required before a PCT application can be filed by an Indian national? and
  • Whether the documents filed by the petitioner with the IPO at New Delhi on 14th September 2012 can be said to be a PCT Application within the meaning of the Regulations under the PCT and if the said documents can be treated as a PCT Application, what would be the date of filing of the said application?

Analysis by the Court
After an analysis of the provisions of the Indian Patent Act and the PCT regulations, the Court found it difficult to accept the contention that the PCT application received by the IPO is an application made in India. According to the Court, the IPO merely receives the application, assigns a filing date to it and then transmits the PCT application to the concerned authorities, such as the International Bureau and the International Searching Authority, for further processing. The entire processing thereafter takes place outside India, either by the International Bureau or by the International Searching Authority. Therefore, the provisions of Section 39 are necessarily attracted to PCT applications, and hence it is necessary to be granted a written permission for foreign filing by the Controller before a PCT application can be processed. Hence, the practice adopted by the IPO is correct.
The Court rejected the petitioner’s argument that a PCT application filed in India would be subject to scrutiny and clearance under Section 35 but not under Section 39 of the Indian Patent Act. The Court highlighted that the written foreign filing permit in terms of Section 39 of the Indian Patents Act, was granted to the petitioner only on 27th September 2012, though the PCT application was delivered in the Patent Office on 14th September 2012. Since written permit in terms of Section 39 was a mandatory requirement for such an application, the PCT application, even if complete in all other respects, cannot be given a filing date earlier than the date on which the written foreign filing permit is issued. Therefore, the respondents could not have acceded to the request of the petitioners to give 14th September 2012 as the international filing date.

The next issue was whether the petitioners had submitted only an application for foreign filing permit or had they also simultaneously submitted an application to the Indian Patent Office on 14th September 2012.
After analyzing the relevant provisions of the PCT and the Indian Patent Act, the Court held that the PCT application, if it otherwise confirms to the mandatory requirements of the Articles and Regulations of the PCT, can be given 27th September 2012 as the international date.
The Court held that it was not a mandatory requirement to file the copies in requisite number, while submitting the PCT request, since the RO is required to invite the applicants to comply with the requirements of PCT it is only on failure of the petitioners to provide copies in requisite number that the PCT application can be treated as withdrawn. The Court also stated that even if the Power of Attorney is missing, the RO should accept the application and invite the petitioners to correct the deficiencies.

Decision
The Court directed the IPO to grant, within six weeks of the order, 27th September 2012 as the international filing date in respect of the PCT application submitted by the petitioners to the Indian Patent Office on 14th September 2012 and assign an international number to the said application subject to their submitting the copies of specifications in required number, and paying the requisite fee/late fee, within such time as the respondents stipulate in this regard in the light of the provisions of PCT in this regard.

Takeaways:

  • PCT application will not be accepted without a written permit for foreign filing. The international filing date cannot be before the date on which the written permit for foreign filing was issued
  • IPO is a valid RO if at least one of the applicants is an Indian Resident.
  • The RO is expected to accept a PCT application even if it has deficiencies, such as missing power of attorney. The RO should invite the applicants to correct the deficiencies after the PCT application has been allotted a PCT application number and international filing date.