Tuesday, March 19, 2013

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.

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