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

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.

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