Tuesday, April 1, 2014

Delhi High Court Restrains NATCO from Exporting Generic Version of Bayer’s Nexavar under the Compulsory Licence

In a Writ Petition (W.P(C) 1971/2014) filed by Bayer Corporation in the Delhi High Court, NATCO has been restrained, by order dated March 26, 2014, from exporting generic versions of Bayer’s patented drug Nexavar (IN215758) on which a Compulsory Licence was issued by the Controller of Patents on March 9, 2012 and upheld by the IPAB on March 9, 2013.

In its petition, Bayer sought the Court’s intervention to direct the Customs authorities to seize and confiscate NATCO’s generic version of Nexavar, “Sorafenat” since the Compulsory License granted to NATCO allowed it to sell the drug only within the territory of India. In this regard, it would help to refer to Section 90 of the Patents Act, 1970 which spells out the terms and conditions under which a Compulsory Licence is granted. Section 90(1)(vii) and (ix) read as follows:

“(vii) that the licence is granted with a predominant purpose of supply in the Indian market and that the licensee may also export the patented product if need be in accordance with the provisions of sub-clause (iii) of clause (a) of sub-section (7) of section 84;

(ix) that in case the licence is granted to remedy a practice determined after judicial or administrative process to be anti-competitive, the licensee shall be permitted to export the patented product, if need be.”

Under Section 90(1)(vii), it appears that a compulsory license is granted for the “predominant”, and not for the “sole” purpose of supply of the patented article in the Indian market. In other words, the Controller may grant a compulsory license to develop an export market as well. However, such a right of export must be expressly provided for in the licence.  Similarly, under Section 90(1)(ix), it appears that permission must be expressly granted to export the patented product if the licence is granted to remedy an anti-competitive practice, subject to there being a need for export.

In the facts of the case, Clause (g) of the Terms and Conditions of the licence clearly stipulate that the grant of the licence is limited to the territory of India. NATCO denied that it had violated this stipulation and submitted that the availability of the drug outside the country was to be attributed to individual buyers and retailers abroad. After hearing the parties, the Court directed NATCO to ensure that no consignment containing the drug covered by the Compulsory License was exported.

NATCO also sought permission to send samples of active ingredients of the drug for generation of clinical data for submission to the Drug Controller General of India. To this request by NATCO, strangely, the Court granted it the liberty to apply to the Court “for permission to export the drug as and when it obtains permission from the DCGI for clinical purposes”. I am not sure if NATCO’s request was understood correctly because NATCO was making a valid request under Section 107A(a), the Bolar Exemption, which permits use of the drug for generation of clinical data.

In fact, I don’t think NATCO needs the Court’s permission to exercise a statutory right under Section 107A(a). Although Section 107A(a) does not expressly recognize the right of export, the right to “use” may be interpreted broadly to cover export, particularly since the provision recognizes the right to use a patented article for submission of regulatory information even outside India.

We will keep our readers posted on the developments in this case.

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