India: Compulsory Licensing: An Emerging Trend Towards Indian-Patent Regime

Last Updated: 25 February 2014

Article by Priyanka Rastogi and Anshu Bansal1

AN INTRODUCTION

Compulsory licenses are generally defined as "authorizations permitting a third party to make, use, or sell a patented invention without the patent owner's consent."2Under Indian Patent Act, 1970, the provision with regard to compulsory licensing is specifically given under Chapter XVI. Internationally also, the provision of compulsory licensing is well-recognized. The inbuilt flexibility provided under TRIPS agreement also paved the way to grant of compulsory licensing. This is done while keeping in mind the interest of public at large.

Since compulsory licensing limits the right of exclusive ownership conferred by patents, it has long been controversial.3 When it comes to implementation of compulsory licensing, there has been little consensus. Among the signatories of TRIPS, developed countries generally tend to view this provision with suspicion, while the developing countries consider it as an issue of prime importance. Recently, India granted its first compulsory license which triggered the debate as to position taken by India in the international scenario.

In this article, it has tried to analyze the approach followed by the court while deciding the cases relating to grant of compulsory licensing and also explore as to whether the recent decision of Controller General in BMS case is justified in the light of public policy and India's International Commitments. Last but not the least, it is also intended to throw some light on the incidental issues relating to the concept of compulsory licensing like anti-trust laws etc.

FROM NATCO CASE TO BMS CASE: A CRITICAL APPRAISAL

Compulsory licensing should be considered as a last resort and it is required that the applicant should first make an attempt to get voluntary license from the patentee itself. When the applicant is not able to procure the same within the prescribed period (6 months) then the applicant can file for compulsory licensing. In the recent case, when BDR (applicant) requested BMS, a Multinational Pharma company for grant of voluntary license, BMS responded with number of queries asking the applicant to answer. BDR made these queries as their bone of contention and contended that BMS used these queries as a delayed tactics.

In the above case concerning compulsory licensing for anti cancer drug, Controller General (CG) unequivocally said that before going to the merits of the case the threshold requirement of establishing a prima facie case must be satisfied. CG held that BDR had not really made any credible attempt to procure a license and therefore could not be said to have satisfied the statutory requirement that the applicant must have negotiated in good faith for 6 months at least. Pursuant to section 87 of Indian Patent Act, 1970, on receiving the application, the Controller should consider the evidence therein to determine whether a prima facie case is made out on the basis of the facts disclosed in the application.4

In the year 2012, Bayer v. Natco (Nexavar) case emerged as India's first case in which compulsory licensing was granted. The case opened a plethora of questions with regard to India's patent policies. The decision of the case, which came in less than 6 months, reflected that instead of having very strict IP protection regime, the interest of public at large will be of paramount importance. However, the decision also encountered severe criticism from the large segment of multinational companies internationally. It was alleged that despite being a member of the WTO and an important global trading partner, India has systematically failed to interpret and apply its IP laws in a manner consistent with recognized global standards. In addition to this, potential investors also see growing trend of anti-IP developments in India which is creating a significant uncertainty in the market.5

However, India is following a consistent practice. The ground upon which compulsory licensing was granted in Bayer's case hold good even for BMS case. It's just that prerequisite for getting into the merits of the case was not satisfied in the latter case (BMS case). Hence, the approach followed by India is in compliance with its international commitments. India has made several amendments to the existing patent act to make its laws TRIPS complaint.

It has also been claimed that, Compulsory licenses dissuade pharmaceutical and biotech companies from innovating and that the grounds for granting a compulsory license in the case of Natco "did not meet international standards".6 The reason for granting compulsory licensing is always debated and for this reason United States Patent and Trademark Office (USPTO) is taking all available steps to encourage other nations to find solutions to public health issues that do not undermine the incentives provided by intellectual property rights. To this author believe that, granting compulsory licensing is not inconsistent with the incentive provided to the patentees. This is because compulsory licensing can only be obtained after the expiration of 3 years of patent grant and moreover, one of the basic jurisprudence governing the subject of IPRs lies in balancing the conflicting interest of patentee's exclusive rights and benefitting public at large from the invention.

ANTI-TRUST ISSUE: ISSUE DEMANDING IMMEDIATE RESPONSE

In the BMS case, the issue of anti-competitive practice as raised by the applicant in BMS case was also not answered considering section 61 and sub-section (5) of section 3 of Competition Act, 2002. The non-consideration of issue of anti competitive practice is justified considering the facts of the present case.

However, again the question regarding the application of anti-trust laws has being raised and in majority of the cases its application goes unanswered. It is believed that although Competition Act, 2002 strictly bars the civil court to exercise its jurisdiction over the cases in which competition authorities is entitled to deal with , these provision should not provide leeway to the patentees to go scot-free.

One of the grounds for grant of compulsory licensing is that reasonable requirement of public is not being satisfied. High pricing of drug is one of the prominent reasons behind it. Under Patent Act of many countries, high prices of patented products are considered as anticompetitive practice. For instance, under Argentinean Patent Act , high pricing of drugs are considered as anticompetitive. Hence, being a common ground under both IPR and competition law , high prices are capable of being dealt under the ambit of Competition Law and under an IPR abuse by allowing compulsory licensing as well.

CONCLUSION

The decision if BMS case is correct in its entirety. The position is well-settled that before going into the merits of the case, it is required for an applicant to establish a prima facie case. Hence, the BMS case cannot be treated in the same manner as Natco case was dealt. Also the opposition made by multinational companies when Natco case was decided with regard to India following Anti IP policies does not hold water. The case of BMS further clarifies this stand that even though the interest of public at large is of paramount importance, in the view of majority of population, interest of minority (Patentees) cannot be overruled.

It is also required to ponder upon some ancillary issues related to compulsory licensing. In case any patentees tries to go scot-free by taking the defense under section 61 of Competition Act, 2002 , some provisions under the Patent Act should be there in order to prevent them from such easy lee-way. The provision should be interpreted in a manner which will make the act of entering into anti-competitive practice culpable under Patent Act. India is in its nascent stage, however the amount of development going around in the concerned area is reflective of the fact that India is trying to fulfill all its International Commitments. It will take some time to establish India's firm stand in international scenario but as of now the growth in the field of compulsory licensing is unprecedented.

Footnotes

1. Student of BBA. LLB (Hons.), 4th Year, National Law University, Odisha, Cuttack.

2. F.M. SCHERER & JAYASHREE WATAL, POST-TRIPS OPTIONS FOR ACCESS TO PATENTED MEDICINES IN DEVELOPING COUNTRIES 13 (Comm'n on Macroeconomics & Health, Working Paper No. WG4:1, 2001), available at http://www.cmhealth.org/docs/-wg4_paper1.pdf (last visited Dec. 16, 2013).

3. ROBERT A. GORMAN & JANE C. GINSBURG, COPYRIGHT 498- 505 (6th ed. 2002).

4. Patents Act 1970, section 87(1).

5. Written Testimony of ROY F. WALDRON CHIEF INTELLECTUAL PROPERTYCOUNSEL PFIZER INC ,Chief Intellectual Property Counsel, Pfizer. Before the HOUSE COMMITTEE ON WAYS AND MEANS SUBCOMMITTEE ON TRADE Hearing on U.S. INDIA TRADE RELATIONS: OPPORTUNITIES AND CHALLENGES March 13, 2013

6. Shelley Rowland, India's IP Appellate Board endorses compulsory license of patented cancer drug to genetic manufacturer (16th Jan.,2013) available at india-s-ip-appellate-board-endorses-compulsory-license-of-patented-cancer-drug-to-generic-manufacturer.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Khurana and Khurana
InvnTree Intellectual Property Services Pvt. Ltd.
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Khurana and Khurana
InvnTree Intellectual Property Services Pvt. Ltd.
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions