Monday, March 12, 2012

Breaking News: Compulsory Licence Granted to NATCO for Bayer’s Nexavar

We had earlier blogged on applications for compulsory licenses filed by NATCO and Cipla. Thanks to a dear friend, we now have news of a 62-page order delivered on March 9, 2012, P.H.Kurian granting a compulsory license to Hyderabad-based NATCO Pharma in respect of Bayer’s patented drug “Sorafenib Tosylate” which is sold as Nexavar and is protected by the patent no. 215758.

Nexavar is used to treat advanced kidney and liver cancer. The drug prevents growth of new blood vessels and targets other important cellular growth factors. The order treats the drug as “life-extending” drug and not as a “life-saving” drug, which extends the life of kidney cancer patients by 4-5 years, and of liver cancer patients by 6-8 months.

The cost of the therapy using the patented drug is INR 2,80,428 per month and costs approximately INR33.65 lakhs a year. NATCO, on the other hand, proposed a price of INR8800 for a pack of 120 tablets.

The Controller used GLOBOCAN data to peg the number of liver cancer patients as 20,000 and the number of kidney cancer patients as 8900. The Statement of Working filed by Bayer revealed that approximately 200 bottles of the drug were imported in 2009, with no figures for the years 2008 and 2010. The Controller noted that besides being “exorbitantly priced”, the drug was available only in metropolitan cities, and even there, it was out of stock in most pharmacies.

It was also observed that the patentee had reaped revenues in the millions in sales of the drug outside India, whereas the availability of the drug in India left much to be desired. Besides, the patentee imported the drug into India, with there being no evidence of domestic manufacture.

We will discuss the merits of the order in greater detail in a later post. For now, the terms of the compulsory license are as under:

a. The price of the drug covered by the Patent, sold by the licensee shall not exceed Rs.8880 for a pack of 120 tablets, required for one month's treatment.
b. The licensee shall maintain accounts of sale etc. in a proper manner and shall report the details of sales to the Controller as well as the Licensor on a quarterly basis, on or before fifteenth day of the succeeding month.
c. The licensee shall have the right to manufacture the drug covered by the Patent only at his own manufacturing facility and shall not in any whatsoever outsource the production.
d. The license is non-exclusive.
e. The license is non-assignable.
f. The licensee shall pay royalty at the rate of 6% of the net sales of the drug on a quarterly basis and such payment shall be affected on or before fifteenth day of the succeeding month.
g. The license is granted solely for the purpose of making, using, offering to sell and selling the drug covered by the patent for the purpose of treating HCC and RCC in humans within the Territory of India.
h. The licensee shall supply the drug covered by the Patent to atleast 600 needy and deserving patients per year free of cost. The licensee shall annually submit in the form of an affidavit the details of such patients, i.e. name, address and the name of the treating oncologist, to the Office of the Controller of Patents and such report shall be submitted on or before 31st January of the year, in respect of the preceding year.
i. The licensee shall not have the right to import the drug covered by the Patent.
j. The license is for the balance term of the patent.
k. The license does not include any right to represent publicly or privately that the Licensee's product is the same as the Licensor's or that the Licensor is in any way associated with the Licensee's product. The Licensee's product must be visibly distinct from the Licensor's product (e.g. in color and / or shape); the trade name must be distinct, and the packaging must be distinct. The Licensor will provide no legal, regulatory, medical, technical, manufacturing, sales, marketing, or any other support of any kind to the Licensee.
I. The Licensee is solely and exclusively responsible for its product and for all associated product liability. The Licensor, its Directors, Officers, Employees, Agents, and affiliates shall not be held liable in any manner whatsoever for any action of the licensee.
m. The Licensor is free to do whatever it wishes with its residual patent rights subject to the non-exclusive license to the Licensee, and is free to compete with the Licensee and to grant licenses to third parties to compete with the Licensee. 


  1. Thanks Sai for highlighting the key points of the landmark decision. Will be going through the order but would certainly await your detailed analysis on the merits thereof. I can see smoke sirens going off already in the MNC fora. They for one are definitely not a happy lot and I am sure this is not ending here.

  2. The U.S. can -- and should -- learn from India's example in this case. Too often, the patent system gives the appearance of favoring private profit over the public interest. Certainly, innovators have a right to benefit financially from their intellectual property; but in some life-and-death cases it seems to me that basic human rights should trump considerations of revenue maximization.

  3. Hi Sai,

    while the Controller's order of grant of CL to Natco has been challenged by Bayer and the same is now pending before IPAB with next hearing due on September 3, 2012, are you aware of a related matter (mentioned below) which i just came across and thought could be a subject of deliberation:


    CS(OS) 2475/2012

    NATCO PHARMA LTD ..... Plaintiff

    Through Mr. Gurinder Pal Singh, Mr. M. K. Singh and Mr Gaurav Barathi, Advs.


    SHAMNAD BASHEER ..... Defendant




    O R D E R


    Counsel for the plaintiff submits that the defendant has been publishing derogatory and disparaging material primarily relating to the proceedings of a suit bearing CS(OS) No. 2279/2009 filed by M/s. Bristol Myers Squibb against the plaintiff. Counsel also submits that the said matter is listed before Hon?ble Mr. Justice V.K. Jain on 18.9.2012.

    List the matter before the same Bench on 21.8.2012, subject to orders of Judge Incharge (Original Side).

    1. Dear Ashwani,
      A senior IP practitioner mentioned the matter to me today with a deep sense of disappointment and I honestly still do not know what to make of this Suit. It is probably best to not discuss the case since it is sub-judice. As practicing lawyers who are expected to accord greater respect to the judicial process than laypersons, I think it is best to not comment on the case.

      On an different note, for my own knowledge, the case got me checking up the Delhi High Court Rules which govern inspection of Court records and procuring copies of the records. Chapter 5 of the High Court Rules is titled "Records—Their Inspection, Grant of Copies and Destruction". Rule 2 of the said Rules reads as follows:

      "2. Inspection of pending cases by parties or agents—Records of pending cases will be open, as of right, to the inspection of parties or their authorised agents or any Advocate of the Court, who is duly authorised to act in the case or junior counsel whether he be an advocate of a pleader of such duly authorized advocate provided the latter certifies on the application that he has authorized his junior to inspect the record for him.
      Provided that an Advocate of the Court may inspect the record of any such case on giving an assurance that he is in communication with one of the parties with a view to being retained in it:
      Provided also that the inspection of a record will not be permitted on the date fixed for hearing without the special order of the Judge or one of the Judges before whom the case is pending."

      This Rule makes it clear that no third party who has no connection to a matter may inspect the records a pending suit. However, can copies relating to the suit be granted to a stranger? Following are the relevant rules:

      "(ii) Grants of certain copies to strangers—A stranger to the suit or appeal may, after decree, obtain as of right, on payment copies of the plaint, memorandum of appeal, written statements, affidavits and petitions filed in the suit or appeal; and may, for sufficient reason shown to the satisfaction of the Court, obtain copies of any such documents before decree.
      (iii) Grant of certain copies to stranger—A stranger to the suit or appeal may also obtain as of right, on payment copies of judgments, decrees or orders, at any time after they have been passed or made.
      (iv) Grant of copies of exhibits to strangers—A stranger to the suit or appeal has no right to obtain copies of exhibits put in evidence, except with the consent of the person by whom they were produced or under the orders of the Court."

      These Rules make it clear that a stranger to a suit has no right to obtain copies of records (including pleadings, evidence and affidavits) as long as the matter is pending, unless he has taken the consent of the Court. Even the High Court's RTI rules are clear since they do not deal with supply of case documents. They only deal with information related to the functioning of the High Court.

      So, if any person is in possession of copies of records of a suit and makes available such records to third parties or to the public in general for any reason, he could be in violation of the High Court Rules. The logical question then could be, how can a person possess copies of the records, if they are neither obtained under the High Court Rules nor can they be obtained under the RTI Rules?

      What are your thoughts?

      Best Regards,

    2. He could obtain copies from one of the parties; There is no prohibition against parties giving copies of pleadings to third parties. We routinely give copies to press persons who are third parties/strangers to the suit/petition and they announce contents thereof to the public at large - I am a lawyer practising in Chennai, but I am unaware of any special Rules of any court according that privilege to press (other than the omnibus Art.19 (1)(a) of the Constitution.
      If the defence is that one of the parties have given him copies, what is the violation, much less actionable illegality?
      PVS Giridhar, Advocate, Chennai

    3. Dear Sir,
      Under the Delhi High Court Rules, I am not sure if parties may share pleadings with third parties with a view to have them published. The Rules seem to envisage sharing of exhibits led in evidence with the consent of a party; however, a similar exception is absent with respect to pleadings. In fact, a stranger needs to show sufficient reasons to the Court to be given copies of the records before a decree is passed. Based on my discussions with senior practitioners here in Delhi, the consensus appears to be that no stranger can be handed a copy of the pleadings in a pending matter by a party. Therefore, in terms of an actionable wrong, illegal access to judicial records could be a potential ground.

      Best Regards,

  4. Dear Sai,

    I still have some doubts on the consequences of such offence: Does the rules specify any punishment for the illegal access to judicial records? or would it be brought under contempt of court? If so, is the access to judicial records 'per se' punishable or is it the use of such accessed information in a particular manner (such as the one which would impede or interfere the administration of justice in a sub-judice matter or defamation as in this case)which is punishable? Could there be a defence under free speech or general academic (critical) review?

    Let me know if you have some clarity of thoughts on this. Thanks.

    1. Great questions Ashwani! As for the first question with respect to punishment for illegal access to judicial records, I need to point out judgments of the Delhi High Court where the Court seems to have proceeded on the literal interpretation of the High Court Rules that no stranger to a proceeding may have access to the Court's records. They are :
      1. Swadeshi Polytex Ltd. vs V.K. Goel And Others- AIR 1987 Delhi 260
      2. Mr. Shekhar Singh vs Central Information Commission- 2010
      3. Khairati Lal vs Delhi Development Authority- ILR 1974 Delhi 51

      As for punishment, I honestly do not wish to fib here. I think if the court's record is the Court's property, illegal access to it may attract provisions of the IPC which deal with offences related to property such as theft, or may be legislations that deal with confidentiality of State's documents.

      As for publication of the Court's record, it would require a combined interpretation of Sections 3, 4, 5, 12 and 13 of the Contempt of Courts Act, 1971 to address the question of whether or not a particular act amounts to contempt and if the alleged contemnor has valid reasons to raise defences under Section 13 of the Act. This topic merits a post in itself, which i shall put up shortly. Thanks for giving us more food for thought.

      Best Regards,

  5. Dear Sai,

    What exactly is the relevance of the source of the pleadings in a defamation suit? For some reason, even the pleadings filed by Natco have mentioned this point. Any civil suit for defamation must concern itself with proving three things: 1. The statement is defamatory, 2. refers to the plaintiff, 3. has been published by the defendant. If that is the case, can publishing a plaint ever amount to defamation? Does it fall under any of the three heads mentioned? While the actual post itself can be scrutinised, the posting of a plaint is completely outside the law of defamation. Harping on this point is therefore, moot.

    Any discussion on this matter should devote itself to the argument of whether the blog post qualifies the defences to defamation. This should include: 1. Justification of truth and 2. Fair comment without malicious intent that is based on an edifice of truth. I would have thought that blogs would be more vociferous in discussing the clamp on fair comment that this plaint seems to represent.

    1. Thanks for the response Sai.

      I am glad you cleared that up. I was worried I may have missed a few classes in college on defamation!

  6. Dear Anon,
    My comments are not with respect to the suit filed by NATCO. I agree that the source of pleadings are not relevant to the defamation suit filed by NATCO. My discussion with respect to the provisions of the law relating to access were independent of the suit.

    On the issue of free speech and contempt, please read this blogpost which was put up today-

    In the post linked above, I have discussed the extent of free speech available with respect to pending matters. Please read the post and let me know if you still think that I have not raised the issue of free speech and fair comment. Please let me know if there is an aspect of law which I could have discussed, and I shall be happy to discuss them further on the blog.

    Best Regards,

  7. But this is not a contempt petition, it it?? It is a defamation suit. How are your comments on contempt and defences applicable (which you've laid out very well) relevant to the present proceedings, Sai?

    1. Dear Anon,
      My post was a follow up to the following comment from Ashwani:
      "If so, is the access to judicial records 'per se' punishable or is it the use of such accessed information in a particular manner (such as the one which would impede or interfere the administration of justice in a sub-judice matter or defamation as in this case)which is punishable? Could there be a defence under free speech or general academic (critical) review?"

      My post was not with respect to the suit filed by NATCO against Mr.Basheer, rather it was to clarify the position of law with respect to use of information related to a pending matter and defences against allegations of interference with administration of justice. As for the issue of defamation and defences available under the law, I will be putting up another post, hopefully by tonight.

      Best Regards,