The Pre-Grant Opposition, Section 21 and Section 14 of the Patents Act

In the last two posts, I had written about the consequences under Section 21 of the Patents Act in not responding to a pre-grant opposition within the prescribed time period. In this post, the idea is to take a concise re-look at the framework of the pre-grant mechanism, the scope of Sections 21 and 14. 

Let me first address the scope of Section 14. Here's the provision:

14. Consideration of the report of examiner by Controller: Where, in respect of an application for a patent, the report of the examiner received by the Controller is adverse to the applicant or requires any amendment of the application, the specification or other documents to ensure compliance with the provisions of this Act or of the rules made thereunder, the Controller, before proceeding to dispose of the application in accordance with the provisions hereinafter appearing, shall communicate as expeditiously as possible the gist of the objections to the applicant and shall, if so required by the applicant within the prescribed period, give him an opportunity of being heard.

The underscored portions of the Section are relevant to the issue at hand. A hearing under Section 14 applies only with respect to an adverse examination report, not to a pre-grant opposition.

It also  needs to be pointed out that a hearing under Section 14, even with respect to an adverse examination report, cannot be granted beyond the 12 month period mentioned in Rule 24B(4). I had said this about three years ago elsewhere. This is because, contrary to what was incorrectly held in Ferid Allani v. Union of India, the 12 month period under Rule 24B(4) is non-extendable, which is abundantly clear from Rule 138.

Coming back to the issue of pre-grant opposition, Section 14 is not an omnibus hearing provision which can invoked at every instance. Rule 129 of the Patents Rules is an omnibus hearing provision, which too can be invoked only if it does not interfere with the deemed abandonment under Section 21. 

The other reason why Section 14 does not apply to a pre-grant opposition is because Rule 55(6), subject to Rule 55(4), takes care of the hearing requirement with respect to a pre-grant opposition. Therefore, Section 14 is irrelevant in so far as a pre-grant opposition is concerned.

The sum and substance of this is, Section 14 cannot come to the rescue of a patent applicant who has failed to respond within the non-extendable 3 month period to a pre-grant opposition. 

It also appears that a few of us seem to be of the view that Rule 24B and the non-extendable time period of 12 months prescribed therein, apply to a pre-grant opposition. This is again erroneous because Rule 55 is self-sufficient with respect to the time period available to a patentee to respond to a pre-grant opposition. Therefore, the only applicable time-period to respond to a pre-grant is the 3 month period provided under Rule 55.

One of the reasons a few people apply the rules and timelines of examination to the pre-grant opposition is because they assume that pre-grant opposition falls with the definition of examination under Section 12. Such assumption is incorrect because a pre-grant opposition under Section 25(1) is a stand-alone mechanism which aids examination, but is not technically a part of examination under Section 12. 

As regards my contention that abandonment under Section 21 is the inevitable consequence of not responding to a pre-grant opposition, I wish to reiterate that a pre-grant opposition notice under the Act is not a mechanical one. As I said in the earlier post, it is issued, or at least presumed to be issued, only after application of mind by the Controller who believes that the pre-grant representation deserves his consideration and also merits response from the patent applicant. 

Therefore, if the patent applicant fails to respond within 3 months to this considered notice of pre-grant opposition issued by the Controller, there is no reason to believe that he is still interested in pursuing the patent application. It is precisely to address such situations that Section 21 exists. To restate what I said in the earlier post, Section 21 does not limit itself solely to issuance of and response to examination reports. It applies to all necessary steps that a patent applicant must take within the applicable prescribed time period to evince his seriousness in keeping the application alive, failing which deemed abandonment follows automatically.

Importantly, if office practice does not respect the inviolability of Section 21, it does not mean that office practice is correct or that the timelines prescribed in the Act and the Rules are not mandatory. It only means that office practice is wrong, there is no other way of saying this.

Comments and Corrections are welcome!

Busting the Perceived Sanctity of “Office Practice”

In my last post, I had taken the view that the consequence of the patent applicant not responding to the notice of pre-grant opposition issued by the Controller within the non-extendable 3 month period under Rule 55(4) leads to deemed abandonment of the patent application within the meaning of Section 21 of the Patents Act. 

The comments received to the post give me the impression that "office practice" has a vice-like grip on the practice of the subject. A large part of what patent practitioners understand and practice, in particular patent agents and non-litigating patent practitioners, is influenced by office practice and practical exigencies of dealing with a particular patent application. This is justifiably so because judicial guidance on the minutiae of office practice is precious little, and until the time applications present more opportunities to address practices which we take for granted, it may not make sense for practitioners to go against the tide of “office practice”.

Further, for prosecuting patent attorneys the primary objective is to deliver results to the client, and set the law in the process, not the other way round. After all, the client doesn’t pay the attorney to set the law unless the law helps further the client’s case. Therefore, I don’t wish to commit the oft-committed sin of pontificating to experienced practitioners as to how they ought to go about their practice.

May be it is fashionable for a few to bear a superior prejudice and constantly berate Indian patent practitioners without ever having practiced the subject or with negligible experience with any form of patent practice. I don’t approve of this tendency because sanctimony hasn’t ever helped change a situation, instead it only contributes to alienating an audience with whom it is absolutely imperative to engage if we wish to have a constructive discourse aimed at changing the system for the better.  

My sole intention is to drive home the point that although it might help in the short term to conform to office practice to get the job done, it is important to rigorously test office practice on the anvils of statutory interpretation so that we know what is the most plausible position of the law that a Court might take if presented with an issue. At least this way, we know what is in store if office practice were to be under the Court’s lens, and accordingly have a Plan B in place.

Simply put, it does not help to delude ourselves into believing that office practice is the law or that it represents the true position of the law. We must not let office practice affect our judgment to such an extent that we become incapable of objectively analyzing the legality of an action based strictly on established canons of statutory interpretation.

It would probably help if patent agents, who primarily handle drafting and prosecution, interact as frequently as possible with patent litigators so that the drafter is on the same page as the litigator. This way consistency in arguments can be maintained from the stage of prosecution to litigation.

I sincerely hope that these suggestions are received in the right spirit.

Consequence of Not Responding to a Pre-grant Opposition under the Patents Act

I have been meaning to write on this issue for quite some time because there appears to be this misconception that non-response to a pre-grant opposition is not adverse to a patent application. In this post, I intend to address this issue layer by layer.

The procedure to be followed in a pre-grant opposition is prescribed in Rule 55 of the Patents Rules, 2003. The Act and the Rules refer to the pre-grant opposition as a “representation”, which the Delhi High Court in UCB Farchim v. Cipla (Refer to Para 13 of the judgment) interpreted as an “aid” to the process of examination of a patent application.

Upon receipt of a pre-grant opposition, the Controller is not expected to mechanically inform the patent applicant of the opposition. In fact, Rule 55(3) clearly requires the Controller to consider the representation, and apply his mind. Only if the Controller is of the belief that the representation could lead to either refusal or amendment of the patent application, he shall give notice of the representation to the patent applicant and send him a copy of the representation.

This firstly means that a pre-grant representation may be rejected in limine if the Controller does not believe that the representation affects the patent application. The second consequence is that since the pre-grant mechanism has been interpreted by the Delhi High Court as being an aid to the examination process, the issuance of notice of the pre-grant opposition must be treated as being similar to the issuance of an examination report, if not the same.

The reason the two are similar but not the same is because in a standard examination report issued by the Controller under Rule 24B, the patent applicant has 12 months from the date of receipt of the FER to put his application in order for grant. However, under Rule 55(4), the patent applicant gets a maximum non-extendable period of 3 months from the “date of notice” to respond to the pre-grant opposition. (Rule 55(4) does not refer to “date of receipt of the notice”, however the general rule of notices could require this to be read as “date of receipt of the notice”)

The period of 3 months under Rule 55(4) is non-extendable because Rule 138, which vests the Controller with the power to extend time, clearly excludes Rule 55(4) from its purview. Therefore, in the event the patent applicant fails to file his response to the pre-grant opposition within 3 months from the “date of notice”, he cannot be permitted to respond to the objections raised in the pre-grant representation beyond that period, nor does the Controller have the right to extend the time.

Now that the issue of time extension has been irrefutably addressed, what needs to be addressed next is the true consequence of not responding to a pre-grant opposition. While Rule 58, which deals with a post-grant opposition, clearly states that if the patentee does not respond to the post-grant opposition in time, his patent shall be deemed to have been revoked, Rule 55 is silent on the issue of non-response to a pre-grant opposition by the patent applicant.

Does this mean there is no adverse effect because Rule 55 is silent? Or is Rule 55 silent because the issue is addressed by another provision? This is where one needs to refer to Section 21(1) of the Patents Act, which reads as follows:

21. Time for putting application in order for grant: (1) An application for a patent shall be deemed to have been abandoned unless, within such period as may be prescribed, the applicant has complied with all the requirements imposed on him by or under this Act, whether in connection with the complete specification or otherwise in relation to the application from the date on which the first statement of objections to the application or complete specification or other documents related thereto is forwarded to the applicant by the Controller

Section 21(1) requires the patent applicant to comply with all requirements imposed on him by or under the Act within the prescribed period, failing which the application shall be deemed to have been abandoned. This mandatory requirement applies to filing of a response to a pre-grant opposition as well.

It is to be noted that Section 21(1) does not restrict itself to responding to the FER issued by the Controller under Rule 24B, but goes on to include “other documents related thereto” which is forwarded to the patent applicant by the Controller. This must include the issuance of notice under Rule 55(3) to the pre-grant opposition as well.

Further, the prescribed period referred to in Section 21(1) in relation to a pre-grant opposition is 3 months.  Consequently, if a patent applicant does not file his response to a pre-grant opposition within the non-extendable 3 months from the date of notice, he shall be deemed to have abandoned his application.

What is also critical is that the effect of Section 21 being automatic, upon failure by the patent applicant to comply with the requirements of the Act within the prescribed period, the Controller has no power to intervene and annul the effect of this deeming provision. Therefore, no reminders/letters can be sent by the Controller to the patent applicant if the applicant fails to file a response to the pre-grant opposition within 3 months from the “date of notice”.

Comments and Corrections are welcome!

Not so elementary, Watson?

When a work enters the public domain, simply put, it means that that it is free for all to use, “like the air we breathe”. 

Sounds simple and easy, doesn’t it? Before we reach such a conclusion, it is important to examine instances, such as the case of a series of stories revolving around a well-developed character, where it may not be so straightforward. In such cases, copyright would exist not just in the story but also in the character the story is based upon provided such character is sufficiently developed to warrant such protection. Sai Deepak has made several interesting points on this issue here, here and here.

In particular, enforcement of copyright becomes murky when the series is only partially protected under copyright, that is to say, when several stories of the series have already entered the public domain. The question that comes up is whether, as a result, the character based on who such stories are written also enters the public domain.

This is precisely what is being contested by the Conan Doyle estate with respect to copyright in the enormously popular character of Sherlock Holmes. A top Sherlockian scholar, Leslie Klinger has filed a complaint against the estate before the Federal Court in Chicago claiming that the licensing fees that is being demanded by the estate is unnecessary since the characters and elements in the story derive from materials that are now in the public domain. The estate, on the other hand, claims that character is still under copyright protection, till the year 2023, which is when the copyright in Conan Doyle’s last book expires.

Though most of Doyle’s works are in the public domain, stories published post 1923 are protected until 2023. Readers interested in knowing more about the history of ownership in the copyright may refer to this article in the NY Times. (Though it details the complex history of the ownership, the article fails to mention that the fact that the majority of Doyle’s works are now in the public domain)

This said, the mere fact that the series is partially protected under copyright law does not take the character itself out of the public domain as claimed by the estate. When a work enters into the public domain, all aspects of the work, including the character, enter into the public domain. Klinger, in my opinion, is correct in claiming that no license fees can be imposed on the use of the character in this case.

While in this case, Klinger claims that he has avoided the use of any features of the character that have been introduced post 1923, determination of infringement in cases where the character is developed over the course of the series may not be ‘elementary’. Only those attributes of the character that first featured in works that are still protected under copyright law cannot be used by those seeking to include the character in their works though this might be a tedious task for courts to determine.

There is yet another twist in the case of the character in the public domain, which perhaps even Sherlock Holmes may have found difficult to solve. Where trademark in the character has been registered, there has been a disturbing trend where trademark owners in many instances have tried to indefinitely extend their copyright in characters through the enforcement of their trademark rights. (See the Tarzan case, for instance) This is by virtue of the fact that trademarks are perpetual, unlike copyrights, at least till the owner actively uses the trademark.

The Conan Doyle estate, too, has asserted trademark rights in the word mark Sherlock Holmes and in the silhouette image of Sherlock smoking with a pipe.This, however would not exclude anyone from using the character in a novel as trademarks and copyright serve different purposes and seek to protect different aspects of a work.

There is no possibility of the trademark stopping the use of the character is a novel is given that trademarks operate ONLY when such a character is used in the course of trade. Thus, despite trademark law not being able to stop you from using a public domain character such as Sherlock Holmes in a novel, the estate might be able to enforce its rights if the name is used in the tite of the book. This, in my opinion, is the only way in which the owner of a trademark can enforce his rights in relation to public domain characters.

All said and done, this is one judgment that would clarify a lot of doubts on the extent of rights in public domain works that are also protected by other forms of intellectual property.

Mere Presence in the Patents Register despite Revocation Insufficient to Continue Injunction

Yesterday, Amshula had succinctly captured the gist of the Delhi High Court’s order vacating the ex parte order of interim injunction granted in favour of Sugen Inc against NATCO with respect to Sugen’s patented drug Sutent (IN209251).

The issue before the Court was whether the ex parte interim injunction against NATCO must continue in light of the revocation of Sugen’s patent on Sutent by the Controller again in February 2013. According to the Plaintiff, Sugen Inc., the order of revocation had been appealed against and although the IPAB had not stayed the order of revocation, the order was kept in abeyance with respect to removal of the patent from the Register of patents.

In other words, the limited relief granted by the IPAB until disposal of the appeal was that the patent would not be struck off from the Register of patents. According to the Plaintiff, this warranted continuance of the ex parte interim injunction against NATCO.

The High Court took the view, and rightly so, that had a stay been granted against the order of revocation, the Court was entitled to consider continuing the ex parte injunction. However, since the order of revocation had not been stayed, the revocation remained in force and consequently, for all practical purposes, the erstwhile patent could not be enforced in the suit proceedings until disposal of the IPAB appeal in favour of the Plaintiff.

Placing reliance on the Snehlata Gupte decision, the Court held that recordal of the patent in the Register is a mere ministerial act, and true significance lay in the grant or revocation of the patent, not the subsequent act of giving effect to such grant/revocation by entering or removing the recordal from the Register of patents. The Court also relied upon the definition of “patent” under Section 2(1)(m) which defines a patent as one “granted” under the Act, and not as one “entered” in the Register.

We will keep our readers posted on the proceedings in the appeal before the IPAB. 

What is “Working” under the Patents Act, 1970?

In my last post on the IPAB’s decision in the Bayer -NATCO Compulsory licensing case, I had written that the IPAB’s analysis of working requirements under the Patents Act, 1970 was far from satisfactory. In several earlier posts on this blog and elsewhere, I have written on the issue of local working. Extracted below is the post I wrote after the CL order was delivered last March by the Controller:

“In 2 earlier posts elsewhere, I had wondered if a patentee may cite un-workable circumstances to express his inability to domestically manufacture a patented invention. Also, what would happen if the Controller of patents has to choose between access to a life-saving drug by turning a blind eye to large scale importation of the drug to make it both affordable and available to people in India, and fulfillment of domestic working requirements under the Act? This issue too was broached briefly by several speakers in the Roundtable at NLU Jodhpur.

On the issue of “local manufacture” to satisfy working requirements under the Act, I am inclined to state that, TRIPS-compliance aside, the Patents Act exhorts domestic manufacture to prevent reliance on imports and to promote transfer of technical skills to the local population. After all, the idea is reduce the yawning technological deficit between India and the developed world.

The celebrated Ayyangar Committee report, which is the travaux preparatoires to the 1970 legislation, sheds great light on the wording of Section 83 of the Act with respect to working of a patented invention.

In particular, under Part II of the report titled “The Patent System in India”, Paragraphs 37 and 38 are of importance to the issue of working and compulsory licensing. A few lines from these paragraphs are educative and go a long way in understanding and clarifying the Act’s position on local manufacture:

“37. In the present decade under the impact of the national plans that have been formulated for the economic uplift of the country and the raising of the standard of living of its people, the conservation of foreign exchange is a matter of prime importance. In the context of this need, it would be seen that any increase in the price of the patented products imported into the country must, to that extent, be a disadvantage to the country’s economy..........

38. I have already set out the considerations which are said to constitute the quid pro quo for the grant of the patent monopoly, namely (1) the working of the invention within the country so as to result in the establishment in the country of a new industry or an improvement of an existing industry which would profitably employ the labour and capital of the country and thus increase national wealth, and (2) disclosure to the public of the invention and the manner of its working so that on the expiry of the life of the patent, the public are enabled to work the invention themselves and in competition with each other. 

Where the patentee has no intention of working the invention in this country either because he considers this is not profitable or because he prefers to expand the production in his home country so as to achieve there greater efficiency or more production, or is otherwise not interested in working the invention in India, the grant of the patent might tend to improve the patentee’s home country, but offers little advantage to us. Unless therefore the law provides for measures to compel the patentees to work the invention within the country, and these measures are effective to achieve their purpose, the social cost involved in the grant of the patent is not offset by any benefit to the community....”

Considering the unequivocal crystallisation of objectives sought to be achieved by and using the Patents Act, it could be said that local manufacture is an essential and mandatory requirement under the Act. However, should we make an exception when it comes to life-saving drugs? If yes, does the Act in its current form allow for such an exception?”

Given that in Bayer CL Order, the IPAB categorically states that the Ayyangar Committee report remains relevant and immensely educative on the objectives sought to be achieved by the Patents Act, one is surprised that the Committee’s observations with respect to local working and the reasons for its mandatory requirement under the Act have not been given their due in the IPAB’s decision.

The Committee’s position, in fact, leaves very little room for the following unrestrained view of the IPAB:

“In any event, we are not furnished with any evidence regarding this aspect viz., whether the appellant in its facility in India, which admittedly the appellant does not deny, could not have manufactured this drug.  So, with regard to Section 84(1)(c), we find that the word ‘worked’  must be decided on a case to case basis and it may be proved in a given case, that ‘working’ can be done only by way of import, but that cannot apply to all other cases. The patentee must show why it could not be locally manufactured. A mere statement to that effect is not sufficient there must be evidence.    Therefore, while we are of the opinion that the word ‘worked’ has a flexible meaning, and to that extent we differ from The Controller. The appellant has not proved working and so his conclusion is right. Working cannot mean that the requirement of working would be satisfied by having import monopoly for all patented inventions.  We also look at Section 84(7)(iii) which says that the reasonable requirements of public shall be deemed not to have been satisfied if a market for export of the patented article manufactured in India is not being supplied or developed.  Therefore, ‘working’ could mean local manufacture entirely and ‘working’ in some cases could mean only importation. It would depend on the facts and evidence of each case.”

The Ayyangar Report makes it evident that the kind of flexibility the IPAB has read into the Act with respect to local manufacturing requirements is simply not based on the statute or the history of the legislation. Importation may, at best, supplement a patentee’s efforts in fulfilling his working requirements under the Act, but under no circumstances can import alone constitute working.

Comments and corrections are welcome!

Breaking News: Interim Injunction against NATCO Vacated in the Sutent case

3 days ago, the Delhi High Court vacated the ex parte interim injunction granted in favour of Sugen Inc. against NATCO for the infringement of its patent in the drug Sutent. We have earlier blogged on the issue here, here, here, here and here.

The background of the case is interesting as CIPLA, which is not a party to the suit proceeding, had filed a post grant opposition to the patent leading to its revocation by the Assistant Controller of Patents and Designs in September 2012. 

The order of revocation was upheld in February 2013 even after the same was remanded by the Supreme Court for reconsideration. On appeal, the IPAB did not grant a stay of the order of revocation but directed the order for revocation to be kept in abeyance. The matter is scheduled to be heard by the IPAB on the 25^th of this month.

The plaintiffs argued before the Delhi High Court that the patent is still valid and enforceable against the defendants as the order of revocation is pending consideration before the IPAB. The plaintiffs also argued that the patent has not been struck off the Register and anyone inspecting the Register would treat the plaintiffs as the proprietor of the said patent.

The court rejected this argument stating that the mere pendency of an appeal does not amount to a stay of the operation of the order appealed against.

The court has also held that in the absence of an order by the IPAB granting a stay on the order of revocation, the mere entry on the Register does not by itself make the patent enforceable.  The court clarified that it is the ‘grant’ and the ‘revocation’ of a patent that confers rights upon a patentee and not the ‘entry’ in the register.

We thank a well-wisher of the blog for bringing this order to our attention!

Drug Affordability and the IPAB's CL Order: A Lost Opportunity?

In the last 2 posts, I had discussed the IPAB’s Bayer-NATCO CL decision. Below is a discussion on the remaining issues discussed in the Order.

Ground 4: Nexavar was reasonably priced and had been supplied in adequate quantities in India

On the issue of pricing, the IPAB took the view that reasonableness of the price under the Act must be assessed only from the point of view of affordability for the purchasing public, and not whether the price charged by a patentee is justified by the RnD expenditure incurred by it. The IPAB seems to have relied on “reasonably affordable price” in Section 84(1)(b) to conclude thus.

In the facts of the case, before concluding that Bayer’s price of INR 2,80,000 was not reasonably affordable, it would have helped if the Board had  deliberated on metrics/indices for arriving at “reasonably affordable price” for a patented invention. Simply put, the decision lacks in discussion on the dialectics of “affordability”, and instead takes a crude approach to the issue.

Such a discussion is necessary, not to create a hallowed precedent to whet the appetites of lovers of case law, but in order for patentees to understand the legal definition of “reasonably affordable” under the Patents Act and accordingly calibrate their prices. There is no reference to any literature which addresses the issue of “drug affordability”, although there appears to be some degree of scholarship publicly available on it.

In the very month when the NATCO CL was granted last year, an article was published on the official website of the World Health Organization (WHO) titled “Practical Measurement of Affordability: An Application to Medicines”. The stated objective of this paper was “to develop two practical methods for measuring the affordability of medicines in developing countries”. Two methods were proposed in this paper for evaluating affordability of medicines in developing countries, namely the catastrophic method and the impoverishment method.  

Yet another publication by the WHO on the very same issue titled “Measuring Medicine Prices, Availability, Affordability and Price Components” was published in 2008.

There is also the 2011 publication of the National Bureau of Economics Research of the United States titled “The Importance of the Meaning and Measurement of “Affordable” in the Affordable Care Act”.

These and many such documents, in this day and age, can be accessed by most internet-savvy people without much of an effort, and yet no such document seems to have been remotely alluded to by the IPAB. The IPAB could have also sought assistance from qualified experts in this field to understand the practically applicable contours of “affordability”. I am not sure if this option was even considered.

I have no pretensions of being a student of economics, therefore I will refrain from parroting what I am obviously not qualified to discuss with conviction. That said, the point that I am trying to make is that an attempt ought to have been made, at least by the IPAB, to propose a few ways of scientifically or at least systematically demystifying a seemingly fluid and subjective term such as “reasonably affordable”.

It is indeed surprising that wordplay, casuistry and a convenient set of facts seem to have substituted rigorous and diligent analysis. What was in fact an opportunity to lay down practical guidelines for affordability appears to have been lost.

Moving on to other grounds, on the issue of adequacy of supplies of the patented drug by the patentee, the facts spoke for themselves. Consequently, nothing much needed to be said on this by the IPAB.

What is "Working" under the Act?

The other issue of consequence is the IPAB’s take on the meaning of “working” under the Act. The IPAB appears to have chosen the safe path here by saying that “working” needs to be interpreted on a case to case basis, and that the requirement of “local manufacture” need not be applied to all cases. Following is the take of the IPAB on “working”:

“In any event, we are not furnished with any evidence regarding this aspect viz., whether the appellant in its facility in India, which admittedly the appellant does not deny, could not have manufactured this drug.  So, with regard to Section 84(1)(c), we find that the word ‘worked’  must be decided on a case to case basis and it may be proved in a given case, that ‘working’ can be done only by way of import, but that cannot apply to all other cases. The patentee must show why it could not be locally manufactured. A mere statement to that effect is not sufficient there must be evidence.    Therefore, while we are of the opinion that the word ‘worked’ has a flexible meaning, and to that extent we differ from The Controller. The appellant has not proved working and so his conclusion is right. Working cannot mean that the requirement of working would be satisfied by having import monopoly for all patented inventions.  We also look at Section 84(7)(iii) which says that the reasonable requirements of public shall be deemed not to have been satisfied if a market for export of the patented article manufactured in India is not being supplied or developed.  Therefore, ‘working’ could mean local manufacture entirely and ‘working’ in some cases could mean only importation. It would depend on the facts and evidence of each case.”

I am truly not sure what this means and how can such an approach be adopted with respect to a statutory requirement. The Legislature surely could not have intended to apply local manufacture in a few cases, and exempt such a requirement in few others. Either the Act requires local manufacture or it does not. The question is if it does not, what would amount to working under the Act? This has not been addressed satisfactorily by the Board, again because the facts of the case made it clear that the patentee did not satisfy any reasonable standard or definition of working.

Although the right conclusion may have been arrived at in the facts of the case, the approach to issues and the quality of reasoning leave much to be desired.

Comments and corrections are welcome.

Bayer-NATCO Compulsory License Order of the IPAB- II

In the last post, I had discussed the first ground of appeal in the IPAB’s Bayer-NATCO CL decision. Below is a discussion on the rest of the ground.

Ground 2: NATCO did not invest adequate efforts to secure a voluntary license from Bayer

According to Bayer, NATCO did not satisfy the requirement of Section 84(6)(iv) of the Patents Act which requires a CL applicant to make efforts to obtain a license from the patentee on reasonable terms and conditions, and show to the Controller that such efforts had not been successful within a reasonable period as the Controller may deem fit.

The issue involves testing the efforts of an application for CL to secure a voluntary license from the patentee on the anvils of genuineness and reasonableness. In other words, the applicant for a CL must have made a genuine effort to secure a license on terms which are reasonable to both the applicant and the patentee.

This issue essentially called for applying these tests to the correspondence exchanged between the parties in 2010. In NATCO’s letter dated December 6, 2010, it had pointed to Bayer that NATCO was capable of supplying Sorafenib Tosylate at less than INR 10,000 compared to Bayer’s INR 2,80,000. Pointing out that patients from middle and low income group families cannot afford Bayer’s version of the drug, NATCO sought a voluntary license “on reasonable terms and conditions” in order to manufacture the drug at less than INR 10,000.

To this letter of NATCO, Bayer responded saying it had satisfied all requirements under the Patents Act and that its research and development costs accounted for the difference between the prices of both parties. Besides hinting at potential legal action against NATCO for infringement, the letter said thus:

“Your company is not able to make out a case for the grant of voluntary licence to manufacture and market the product Nexavar.  Therefore, our client does not consider it appropriate to grant voluntary licence to manufacture and market the product Nexavar to NATCO”

Applying Section 84)(6)(iv) to the correspondence, the IPAB held thus:

“16. If the appellant thought that less than Rs.10,000/- was not a bargaining point, all that it should have stated was that there was some room for negotiation.  But, the response did not indicate that, instead it clearly indicated that the appellant did not consider it appropriate to grant voluntary licence.  Therefore, the offer was made and it was rejected. The 3^rdrespondent(NATCO) is not required to make another request when its efforts had failed. The law does not require that. On a consideration of these two documents, the Controller was of the view that the 3^rd respondent had made an effort but it could have been “more humble in writing and not hurting the sensibility” of the patented persons. They are after all rivals in business and we do not think there would be room for such sensibilities.  The requirement of law was fully met and we reject this ground.”

Ground 3: The Controller failed to appreciate the effect of CIPLA’s allegedly infringing sales

The IPAB took a similar position as the Controller by holding that Cipla’s allegedly infringing sales of Bayer's patented drug (against which a suit is pending before the High Court of Delhi), even if true, did not lessen the patentee’s obligation to comply with the requirements under the Act. 

Nowhere in the discussion on this issue has the IPAB deemed it important to refer to Section 84(7)(e) of the Act which I had discussed in the aftermath of the grant of the CL to NATCO last year.

In that post, I had written thus:

“The primary defense on the issue of working that Bayer relied upon was that the manufacture of Nexavar by Cipla (against whom Bayer has filed a suit for infringement of its patent) had to be treated as working of the patented invention by Bayer. 

On the face of it, this argument may not find favour with most people. But what exactly are the layers in this argument? Can a patentee rely on an alleged infringer’s activities to establish fulfilment of working requirements that the Act expects of a patentee?

To understand the position of the Act on this question, one must look at Section 84(7)(e). The provision reads thus:

84.(7)(e) For the purposes of this chapter, the reasonable requirements of the public shall be deemed not to have been satisfied, .....if the working of the patented invention in the territory of India on a commercial scale is being prevented or hindered by the importation from abroad of the patented article by-

(i) the patentee or persons claiming under him; or

(ii) persons directly or indirectly purchasing from him; or

(iii) other persons against whom the patentee is not taking or has not taken proceedings for infringement.

The presence of Section 84(7)(e) makes one thing very clear- alleged infringement of a patentee’s invention, and the steps taken by a patentee to restrain such infringement is a relevant fact to be taken into account in the grant of a compulsory license.

The Act, in fact, draws an adverse inference against the patentee if he has not taken reasonable steps to prevent hindrance to the working of the invention by “importation of those directly or indirectly purchasing under him”

This means if the patentee has taken reasonable efforts to prevent infringement, and his efforts have not met with the kind of success that he would ideally expect, should the fact that continued infringement hinders working of the invention by patentee, not be a relevant argument? After all, the patentee’s argument is-

“How am I expected to sell my patented invention if an infringer sells it at less than half the price and I have not been successful in securing an interim injunction against him? Why should I be penalized if my best efforts to enforce my statutory rights have not been successful?”

The fact that infringement of a patentee right hinders working of the invention is something the Act clearly recognizes in Section 86(7)(e). Therefore, I am surprised at the Controller’s take that the issue of infringement of the patentee’s right has no bearing on relevance on the patentee’s ability to fulfil the reasonable requirements of the public.”

I am surprised that the issue has not been considered in the appeal either. Section 84(7)(e) being a point of law, it was possible for Bayer to raise this in the appeal even if it did not invoke the Section before the Controller. Based on my reading of the decision, even Bayer seems to have not referred to the provision.

In the next post, I will address the remaining grounds of appeal.

Order of the IPAB in the Bayer-NATCO Compulsory License Dispute- I

First things first, I thank a whole bunch of friends and well-wishers who were kind enough to share a copy of the Bayer-NATCO Appeal Order of the IPAB , which has been made available on the IPAB’s website. Also, I thank Amshula for sharing with me the salient observations of the IPAB in the order.

By this 48-page order of March 4, 2013, the IPAB had affirmed the Controller’s order (of March 2012) of grant of compulsory license to NATCO on Bayer’s patented drug ‘Sorafenib Tosylate’ which goes by the name, Nexavar. The drug is used as a palliative to treat advanced stages of kidney and liver cancer. While Bayer’s drug was priced at INR 2,80,428, NATCO’s version is priced at INR 8,800.  

In this post, I will cover the first ground of Bayer's appeal addressed by the IPAB.

Ground 1: No Opportunity for Hearing Provided to Bayer before forming a prima facie opinion on need for CL

This ground deals with Section 87(1) of the Patents Act, which states that “where the Controller is satisfied, upon consideration of an application under Section 84, or Section 85, that a prima facie case has been made out for the making of an order, he shall direct the applicant to serve copies of the application upon the patentee and any other person appearing from the register to be interested in the patent in respect of which the application is made, and shall publish the application in the official journal.”

A reading of the subsequent sub-sections of Section 87 clarifies that there is no duty cast on the Controller to notify the patentee before a prima facie opinion is formed. This could be because firstly, the opinion itself is prima facie, meaning thereby only an arguable case had been established by the applicant for the CL. Secondly, except for notifying the patentee of the application for CL, there is no prejudice that is caused to the patentee by mere formulation of a prima facie opinion by the Controller since the patentee is subsequently given an opportunity to rebut the prima facie opinion.

If the formation of a prima facie opinion led to suspension of the patentee’s rights until rebuttal of the prima facie opinion, considering such an adverse consequence, it would have made sense to provide for an opportunity to the patentee to be heard. But since the formulation of a prima facie opinion leads to no such adverse consequence, the Legislature appears to have deemed it fit to not provide for a hearing.

For instance, under Section 14, the Act requires the Controller to hear the patent applicant if the report of the examiner is adverse to the patent application. Clearly, the legislature has provided for a hearing wherever an adverse consequence is in the offing for a patent applicant/patentee. This is expressly reflected in Rule 129 of the Act.

Since no adverse consequence, such as abridgment of the patentee’s rights, follows in the immediate aftermath of the prima facie opinion being formed under Section 87(1), there is no express right of hearing provided for under the Section, nor would the Controller be wrong in choosing to not exercise his discretionary power under Rule 129.

This is the sum and substance of the IPAB’s opinion on this ground, which is extracted below:

“9. At the stage of Section 87(1), the Controller has two options.  Even on the face of it, he may decide that the compulsory licence cannot be granted.  This may be for various obvious reasons like, the application having been made before the lapse of the three years mandated by law.  The Controller has another option.  On the face of it, he may decide that this is a matter where the parties have to be heard before a decision is arrived at.  It does not mean that the Controller has decided one way or the other. It means only that on going through the application and considering the facts alleged, he is of the opinion that the other side should be heard. 

Therefore, he directs the applicant to serve copies on the other side. It is clear from S.87(1) that prima facie satisfaction precedes the direction to issue notice to the patentee or other persons.  Therefore, it is futile to contend that for arriving at prima facie satisfaction, the other side should be heard.  The hearing of the other side arises only after notice of opposition is filed and Section 87(4) stage is reached.  After hearing both the parties, the Controller again has two options.  He may reject the application for licence or he may grant the licence.  At the stage of 87(1) no such determination of rights is contemplated and all that is contemplated at that stage is whether this application deserves to be granted a hearing.  Therefore, this ground is rejected.”

I will deal with the rest of the grounds in the posts to follow shortly.

Perpetuity in Moral Rights- More trouble than it's worth?

The 2012 amendment to the Copyright Act has brought with it several positive changes to copyright law in India, among which, is the amendment to Section 57 of the Act. In this post, I discuss the possible implications of granting moral rights in perpetuity, as envisaged in Section 57 of the Act, particularly the right to integrity provided for in Section 57(1)(b).

Indian law on the term of moral rights has shifted back and forth since the introduction of the Act. Post the amendment of 1994, there was no stipulation on the term of copyright but an act would amount to infringement of the author's right to integrity only if "done before the expiration of the copyright". This limitation in Section 57 appears to have been done away with in the 2012 amendment to the Act, thereby providing for moral rights in perpetuity.

Though moral rights are independent from economic rights in a work, moral rights extinguish upon the expiry of the copyright term in most jurisdictions. Providing for perpetual moral rights, forbids anyone, at anytime from claiming authorship or distorting or modifying any piece of work by the author. 

The debate, of course, is limited to the exercise of the author's right to integrity and does not extend to the paternity right, which should indisputably be entitled to perpetual protection. Its rationale seems to stem from the fact that moral rights are associated with the author's work as much as with the author himself. 

Distortion, mutilation or modification of the work of any kind, thus, would harm the reputation of the author equally even upon his death and perhaps more so given that the author is then unable to defend the integrity of his work. Protection of the right in perpetuity, however seems to extend this logic further to protect the author's personality as embodied in his work as also to protect societal interest in preserving works of authors by preventing unapproved use beyond the term of copyright.

The amendment, lauded as a step forward for protection of authors, prevents cases where works of authors in the public domain have been subject to modifications and grave distortions. Under the law as it existed prior to the 2012 amendment, the heirs of authors of such works were incapable of instituting an action for violation of moral rights since such rights of the author would have expired with the expiration of the term of the copyright in the work. Post the 2012 amendment, it now appears possible for heirs of an author to bring actions after the expiry of the copyright in the work.

The perquisites the amendment brings ought be weighed against the possibilities of its misuse.  The presumption that heirs are well versed in the author’s works so as to be capable of protecting his right to integrity is rebuttable. Additionally, it is also at odds with a subjective approach in determining the violation of the integrity right, given its close relationship with the personality of the author.

Providing rights in perpetuity should therefore not be sans safeguards, as Section 57 stands today. A feasible solution to the problem lies in finding a middle ground that not only ensures the protection of the author's reputation and honour even after his works enter the public domain but also prevents mischief by heirs by protecting instances of fair dealing.

Notwithstanding this problem, a separate area of enquiry is with regard to how the infringement of the right of integrity would be determined and the standard of proof in such claims. A wholly objective test based on a standard of reasonableness, as employed in most common law countries, would render the entire theoretical basis of the doctrine futile. In these jurisdictions, the action complained of is viewed from the point of view of a ‘reasonable person’ to determine whether the integrity right has been violated. 

On the contrary, a subjective test, as employed under French law, as well as recognized by the court in the epoch-making Amarnath Sehgal judgment would perhaps be closer to giving effect to the jurisprudential basis of the doctrine. The issue assumes relevance in the context of perpetuity where it would be absurd to apply a subjective test while the author is no longer alive. The subjective intent of legal heirs might not always coincide with what the author would have done in such a situation.

The problem thus arises when the law not only needs to provide for protection of the integrity in the author’s work even after his death but also needs to ensure its protection without misuse by the author’s heirs. To cite an example, Stephen Joyce, the grandson of James Joyce has strongly been enforcing his grandfather’s moral rights by threatening to sue critics who he is in disagreement with. 

The Newyorker has an excellent piece on the issue, which aptly illustrates how moral rights in perpetuity, may just be more trouble than it’s worth. The only cogent solution seems to be to decide on a case-by-case basis weighing interests from all quarters though this is a seemingly difficult task. Readers are invited to share their thoughts on the issue.