India: Compulsory License: The Most Happening Section Of The Patents Act, 1970

Case review: Lee Pharma vs. AstraZeneca’s ‘Saxagliptin’

In a year 2012, when Patent office issued India's first Compulsory license (CL) to Natco for Nexavar - sorafenib tosylate, Indian Patent law has gained lot of importance worldwide. Some countries are against the decision of granting of CL and some are in their favour. Pertinently, at the stage of grant of CL, India has faced lot of challenges among Pharma industry mainly on the issues of Intellectual Property. Grant of Natco compulsory license has brought a new hope in the Pharma industry and in the country where high prices of life saving drugs are just meant for few wealthy patients and not to the poor and needy.

The article will throw light on the laws prevailing with respect to the Compulsory license in Patents Act, 1970 and the reasons stated by the Controller in light of Section 84 of the Patent Act, 1970 for holding the CL application made by the Lee Pharma.

INTRODUCTION TO COMPULSORY LICENSES

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." Under Indian Patent Act, 1970, the provision with regard to compulsory licensing is specifically given under Chapter XVI. The conditions which need to be fulfilled in order for a compulsory licence to be granted are laid down under Sections 84 and 92 of the Act. As per Section 84, any person who is interested or already the holder of the licence under the patent can make a request to the Controller for grant of Compulsory Licence on patent after three years from the date of grant of that patent on the existence of conditions mentioned in the Section 84 of the Patents Act, 1970. While granting the compulsory licence, the Patent office will take into account few measures such as the nature of the invention, any measures already taken by the patentees or any licencee to make full use of the invention, ability of the applicant to work the invention to the public advantage and time elapsed since the grant of the patent i.e. worked or not worked.

SECTION PERTAINING TO THE COMPULSORY LICENSE IN INDIA:

Section 841:

(1) At any time after the expiration of three years from the date of the grant of a patent, any person interested may make an application to the Controller for grant of compulsory licence on patent on any of the following grounds, namely:—

(a) that the reasonable requirements of the public with respect to the patented invention have not been satisfied, or

(b) that the patented invention is not available to the public at a reasonably affordable price, or

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

CASE REVIEW: LEE PHARMA LTD. VERSUS ASTRAZENECA2

After the successful grant of CL to Natco, many Pharma companies are now trying to grab the benefit of Compulsory licenses in order to make highly expensive drugs at a very low price and easily accessible to public.

Recently, Lee Pharma, a Hyderabad based Indian Pharma Company, filed a Compulsory Licensing (CL) Application for selling and manufacturing the compound on June 29, 2015 at the Patent office, Mumbai. The CL was filed against one of the patented drug 'Saxagliptin' protected under the Patent number 206543 in the name of AstraZeneca with tile as "A CYCLOPROPYL-FUSED PYRROLIDINE-BASED COMPOUND". As informed the 'Saxagliptin' was used for treating Type II Diabetes Mellitus.

Section 84(1) of Patents Act 1970 states that after the expiration of three years from the date of grant of patent any person may make an application for grant of compulsory licence on three grounds - the reasonable requirements of the public have not been satisfied or the patented invention is not available to the public at an affordable price or the patented invention is not worked in the territory of India3. According to the notice issued by the Patent office in August, 2015 the Controller has informed that the Lee Pharma failed to make out prima facie case for the CL application. Various reasons have been mentioned by the Controller where the Lee Pharma has failed to be as prima facie in the said CL application.

Earlier in the year 2014 Lee pharma has requested the AstraZeneca for license of the patented drug 'Saxagliptin'. The AstraZeneca then replied in response to the Lee pharma letter and provide the clarification for not giving any license along with the details of the availability of said drug. Further for not receiving the appropriate reply from the AstraZeneca, despite of the fact that AstraZeneca has send the email reply to Lee and Lee pharma was in fact that no reply has been received from AstraZeneca, the Lee pharma send many reminders to AstraZeneca and later approached to the Patent office for seeking the grant of compulsory license.

As per the Controller's decision in holding the application, the first request for license made by the Lee pharma to the AstraZeneca, was more than 13 months prior to the filing of the application at the Patent office. As per the time frame mentioned in section 84(4) of the Patents Act, 1970 is 06 months which has elapsed in the subject case without any efforts being successful. This is the first reason for holding the CL application of Lee pharma and denied the request.

As per the Section 84(1)(a) where reasonable requirements of the Public with respect of Patented invention has not been satisfied, in view of this, the Controller stated that the Prima facie case has not been made out by the Applicant to the effect that Lee pharma was unable to make out the reasonable requirements of the Public with respect of Patented invention. The Controller has noted the presence of equally efficacious DPP-4 inhibitors that can be substituted for Saxagliptin in treating Type II Diabetes Mellitus, and found that it was impossible for Lee to make assumptions about the demand for Saxagliptin without accounting for these substitutes4. This is the second reason for holding the CL application of Lee pharma and denied the request for CL.

Further the Lee pharma has also failed to Prima facie show that the patented invention is not available to the Public at a reasonable affordable price and thus no case has been made in such respect. This reason of Controller has been guided by the Bayer vs. UOI5 where the price difference quoted by the applicant and respondent was very high. i.e. Rs. 2,84,000 and Rs. 8,800 whereas in the present case, the price quoted by the Lee pharma was marginally cheaper than AstraZeneca's and thus the Controller has been unable to find that the patented product is not available at an affordable price as per Section 84(1)(b) of the Patents Act, 1970. Lastly as per Section 84(1) (c) of the Patents Act, the Lee pharma again failed to Prima facie show that the Patented invention is not worked in the territory of India and thus the reason for upheld the CL application for 'Saxagliptin' in India. In this section the Controller cited Bayer CL case where it was mentioned that local working does not entail local manufacturing in all cases. According to Controller, the patentee is only obligated to furnish reasons that make it prohibitive to manufacture the product locally, and that even this requirement holds particularly in those situations where the patentee possesses manufacturing capabilities in India. The Controller also held that in the absence of any data concerning AstraZeneca's local manufacturing capability provided by Lee pharma, they cannot accept that a prima facie case under this provision has been made out.

IMPORTANT DISCLOSURE MANDATED BY THE PATENT OFFICE TO FOLLOW:

In reviewing the compulsory license case, there is one more section which is very important for the CL in India. Section 146(2) of the Patents Act, 1970 read with Rule 131 of the Patent Rules, 2003 compels every patentee and her licensee to make an annual disclosure as to how far and to what extent they have commercially worked their patent6. In this respect recently Delhi High Court issued notice to the Government of India in a PIL (Public Interest Litigation) filed by the petitioner7. This notice has been issued because most of the major pharma MNC's routinely violate patent working norms and the Indian Patent office has not taken any step in violating such norms to these companies. Before going further, there is a need to understand how section 146 related to the compulsory license. As per section 146(2) of the Patents Act, 1970 every patentee and her licensee has to make an annual disclosure as to how far and to what extent they have commercially worked their patent in India or abroad.

SECTION 146: POWER OF CONTROLLER TO CALL FOR INFORMATION FROM PATENTEES

(1) The Controller may, at any time during the continuance of the patent, by notice in writing, require a patentee or a licensee, exclusive or otherwise, to furnish to him within two months from the date of such notice or within such further time as the Controller may allow, such information or such periodical statements as to the extent to which the patented invention has been commercially worked in India as may be specified in the notice.

(2)Without prejudice to the provisions of sub-section (1), every patentee and every licensee (whether exclusive or otherwise) shall furnish in such manner and form and at such intervals (not being less than six months) as may be prescribed statements as to the extent to which the patented invention has been worked on a commercial scale in India.

(3)The Controller may publish the information received by him under subsection (1) or sub-section (2) in such manner as may be prescribed.

In our Patent laws section 146 i.e. working statement plays an important role at the time of compulsory licensing cases. With the help of working statement [which are required to be filed before the expiration of 31st March of every year] the details provided by the Patentee or their licensee one can estimate whether the patentee has fulfilled the reasonable requirements of the public by interalia selling the patented product at an affordable price or at higher price violating the section 84 (1)(b) of the Patents Act. This information played a critical role in the Lee Pharma Ltd. Versus AstraZeneca and Bayer vs. Natco compulsory licensing dispute, where these details helped the Controller in getting the decision related to grant or rejection of Compulsory license when applied. In the first grant of CL application, Natco obtained the details from the working statement filed by the Bayer that its super expensive patented drug for kidney/liver cancer was reaching just about 2% of the patient population and sold at a very high price violating the section 84 norms of the Patents Act.

In this way, if the patentee fails to fulfil this important statutory information, the penalty in the form of compulsory licensing and revocation of Patent will come and this will take such companies in loss of Patent and also it is impossible to determine whether a patentee has satisfied the reasonable requirements of the public, an important precondition for compulsory licensing in India.

CONCLUSION

It is believed that this era will bring more challenges in terms of grant/ rejection of CL for more patented drugs. More rivalry is yet to be seen between Indian pharma giants and larger MNCs. The functioning of Indian Patent office in dealing with CL case will also bring more clarity about the future of CL in India and the rules prevailed such laws in India.

In the present case, it is to be understood that the Controller has not fully denied the CL application of Lee pharma rather the Controller has only inform the Lee pharma that they have not made out the prima facie case for the order under Section 84. As per the notice issued by the Controller, under Rule 97 (1), Lee pharma has one month from the date of notification to request for the hearing, if it wants to proceed with the application and if request for hearing is not made, Controller shall refuse the application.

Now it's time to watch how Lee Pharma prepare them for Grant of India's 2nd CL, the Controller's final decision in grant or rejection of such compulsory license and the impact of petition filed in respect of non submission of working statement details to those companies who are not following the proper submission of working disclosures.

Footnotes

1 http://ipindia.nic.in/ipr/patent/eVersion_ActRules/sections/ps84.html

2 http://spicyip.com/wp-content/uploads/2015/08/Leeprima-facie-notice1.pdf

3 http://health.economictimes.indiatimes.com/news/pharma/india-rejects-lee-pharmas-compulsory-licenceplea/48521691

4 http://spicyip.com/2015/08/saxagliptin-cl-round-1-controller-shoots-down-lee-pharma.html

5 https://indiancaselaws.wordpress.com/2013/12/14/bayercorporation-and-ors-vs-union-of-india-uoi-and-ors/

6 http://spicyip.com/2011/04/drug-firms-and-patentworking-extent-of.html

7 http://spicyip.com/wp-content/uploads/2015/05/FORM-27-WP-1R-copy.pdf

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