ROCHE V NATCOROCHE V NATCOSUCHITRA BAIALTACIT GLOBALCHENNAI

TRIPS AGREEMENT ON TRIPS AGREEMENT ON COMPULSORY LICENCESCOMPULSORY LICENCES

The TRIPS Agreement allows the use of compulsory licences. Compulsory licensing enables a competent government authority to license the use of a patented invention to a third party or government agency without the consent of the patent-holder. Article 31 of the Agreement sets forth a number of conditions for the granting of compulsory licences. These include a case-by-case determination of compulsory licence applications, the need to demonstrate prior (unsuccessful) negotiations with the patent owner for a voluntary licence and the payment of adequate remuneration to the patent holder. Where compulsory licences are granted to address a national emergency or other circumstances of extreme urgency, certain requirements are waived in order to hasten the process, such as that for the need to have had prior negotiations obtain a voluntary licence from the patent holder. Although the Agreement refers to some of the possible grounds (such as emergency and anticompetitive practices) for issuing compulsory licences, it leaves Members full freedom to stipulate other grounds, such as those related to non-working of patents, public health or public interest.

DOHA DECLARATIONDOHA DECLARATIONThe Doha Declaration states that

each Member has the right to grant compulsory licences and the freedom to determine the grounds upon which such licences are granted

TIME PERIOD FOR FILING TIME PERIOD FOR FILING REQUEST FOR COMPULSORY REQUEST FOR COMPULSORY

LICENCELICENCE

At any time after the expiration of three years from the date of the grant of a Patent, any person interested may make an application to the Controller for grant of Compulsory Licence on Patent.

GROUNDS FOR MAKING GROUNDS FOR MAKING APPLICATION FOR COMPULSORY APPLICATION FOR COMPULSORY

LICENCELICENCE

That the reasonable requirements of the public with respect to the Patented invention have not been satisfied or

That the Patented invention is not available to the public at a reasonably affordable price or

That the Patented invention is not worked in the territory of India.

LEGAL STATUTESLEGAL STATUTES

Section 92 and 92 A of Indian Patents Act 1970.

COMPULSORY LICENSING CASE IN COMPULSORY LICENSING CASE IN INDIA INDIA

FACTS OF THE CASE The first ever compulsory license application made in

India was by Natco Pharma for the manufacture and exportation of Roche’s patented anti-cancer drug Erlonitib to Nepal, the sub-Himalayan kingdom. Besides Erlotinib, Natco Pharma had also applied for the issue of a second compulsory licence to the IPO for manufacture and export of sunitnib [sutent] also an anti-cancer drug.

The issue of grant or non-grant of the compulsory licence was still under consideration when Natco filed an interlocutory petition before the Controller of Patent asserting that since the application for grant of Compulsory license was made by them under S. 92 A of the Patents Act 1970, the Patentees should not be provided with an opportunity of being heard. In other words, Natco Pharma requested the Controller to disallow Roche (the Patentees) the right to actively represent them in the compulsory license proceeding before him.

ARGUMENTSARGUMENTS The patentees' central argument that it was entitled

to be heard during the consideration of Natco'scompulsory licence application was based on thepremise that under both statutory and common law, thePatent Controller was required to grant the patenteesa hearing before exercising any discretionary actionadverse to their interests.

To buttress its argumentthat the Controller was required to do so, thepatentees pointed to provisions in the Patents Actthat required the Patent Controller to grant a "patentapplicant" or any "party to a proceeding" a hearingprior to exercising any discretionary power adversely.They argued that there was no material differencebetween "patent applicant" and "patentee," andtherefore these provisions (section 80 and rule 129)obligated the Controller to grant a hearing beforegranting a compulsory licence under section 92A.

Contd…Contd… It should be noted, however, that the language of

section 92A is mandatory, not discretionary, and theController is required, upon receipt of an applicationin the "prescribed manner," to grant a compulsorylicence for export.

The patentees also argued that under fundamentalcommon-law principles of "natural justice" (similar tothe doctrine of "due process" in other jurisdictions),an opportunity to be heard was required before anyaction adverse to the patentee's interests was takenby the state.

Contd…Contd… Counsel for Natco, Mr. S Majumdar, responded by

arguing that the history of the Doha Declaration andthe 30 August Decision fully justified thedifferential treatment of compulsory licences forexport under section 92A, in which no right of hearingis expressly provided, with the normal proceduresgoverning compulsory licences (as provided undersections 84-92) in which the patentee's right to ahearing is expressly recognised. (Even under these"normal" compulsory licensing provisions however,expedited measures for granting compulsory licences insituations of national emergency, situations ofextreme urgency, or for public non-commercial use areavailable, and the requirement for providing thepatentee with an opportunity to be heard can bedispensed with by the Controller in such circumstances.)

Contd…Contd…Natco argued that the Doha

Declaration expressly recognised the gravity of public health problems that developing countries were facing, and sought to "balance the needs" of both patent holders and countries facing an urgent need to provide affordable medicines to its people. Natco argued that "when there is a need [for drugsproduced under compulsory licence], there should be a rapid response."

Contd…Contd… In support of its argument that there was no

requirement to give a patentee the opportunity to beheard prior to the issuance of a compulsory licence,counsel for Natco pointed to Canada's Access toMedicines Regime, which similarly does not grant theright of a hearing to the patent holder during theapplication process (section 21.04), but merely givesthe patentee the right to challenge the validity ofthe compulsory licence after the fact in a federalcourt (section 21.14). Similarly, Natco argued, thepatentees in India retained the right to challenge thegrant of a compulsory licence in the courts if andwhen the compulsory licence was granted.

Contd…Contd…In response to the patentees' argument that theController could only determine the amount of adequate remuneration with the assistance of the patentees, counsel for Natco relied on the WHO/UNDP's publication, "Remuneration Guidelines for Non-Voluntary Use of a Patent Medical Technologies“ which laid out several easily calculated methods for determining adequate remuneration in such circumstances without the involvement of the patentees.

Contd…Contd… Responding to the patentees' assertion that "patentapplicant" and "patentee" were essentially the same,Natco pointed to the definition of "patentee" in thePatents Act to show that a "patent applicant" and"patentee" were distinct entities under the law, andthus the provisions relating to the use ofdiscretionary power for patent applicant had noapplication to the current proceedings.

Finally, counsel for Natco argued that even the commonlaw doctrine of natural justice recognised that theright to be heard was not absolute, and could bedispensed with in situations that required promptaction in the public interest. Counsel for Natcoargued that this was precisely such a situation inwhich prompt action was required. Natco pointed outthat its compulsory licence application was filed inDecember 2007, and that the intervention of thepatentees had already delayed the application'sconsideration by several months.

Contd…Contd… ◦ On rebuttal, counsel for the patentees distinguished

the comprehensive nature of Canada's legislation fromthe spare language contained in section 92A. Hepointed out the numerous safeguards contained in theCanadian legislation that ensured that the patenteewould be treated fairly, such as the requirement thatthe applicant for the compulsory licence first attemptto obtain a voluntary licence (which Natco apparentlyhad not done in this instance); and that the holder ofa compulsory licence provide notifications to thepatentee of the impending export of the productproduced under the compulsory licence. Counsel forthe patentees argued that no such requirements wereincluded in the Indian legislation, and in the absenceof such comprehensive safeguards as contained in theCanadian legislation, the very least that theController could do was to allow the patentee to beheard during the application process to ensure fair treatment.

Contd…Contd… Counsel for patentees further argued that the "notice"

by the Nepal government that Natco was relying uponwas insufficient to amount to a formal notification ofan intent to import drugs produced under a compulsorylicence. He alleged that Natco, in its applicationfor a compulsory licence, had merely submitted aletter from the Nepal government recommending that oneconsignment of erlotinib be approved for import fromIndia during the period 2006-2007. He argued thatthis was insufficient to demonstrate Nepal's intent toutilise the 30 August mechanism to import drugsproduced under a compulsory licence. In contrast, hepointed to the formal notification provided to the WTOby Rwanda of its intent to utilise the paragraph 6 implementation.

JUDGEMENTJUDGEMENT

RESERVED

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