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Natco vs Roche/Pfizer: Hearing on the Right to Hearing


Lawyers Collective (LC) has this excellent update on the latest hearing in the Natco vs Roche/Pfizer compulsory licensing matter. As we stated in previous posts, the current controversy is around whether or not the patentees, Roche and Pfizer should be heard in the matter. Although the patents act does not explicitly provide the right to a hearing, the patentees argue that under a very liberal reading of the text of the statute (and keeping in line with the spirit of the Act), they ought to be heard. And that if such hearing were denied, it is likely to result in a transgression of the principles of natural justice (audi alteram partem).

Before I reproduce LC’s comprehensive update, I want to reflect on a rather interesting trend in the recent Indian patent litigation cases. Almost all the major cases seem to be locked up in procedural disputes. And we’ll have to wait a long while before the judges get to the substantive merits of these disputes. Take the Novartis case–which is locked up in whether or not the IPAB can decide a case without a patent expert. And with the Natco CL dispute, the patent office has spent considerable time hearing parties to a dispute to determine whether or not they should be “heard” in the first place!! Perhaps our patent attorneys need to be more proficient in procedural laws rather than the substantive laws (such as the patents act). But to be fair, this is symptomatic of not just patent litigation, but all other kinds of litigation in India. And perhaps of litigation in some other parts of the world too..

I, for one, am more interested in finding out if Natco will be successful in persuading the Nepal government to issue a TRIPS notification attesting to the fact that there is a pressing public health problem in Nepal. And I can hazard a guess that there must be considerable lobbying at the moment in Nepal by both parties to this dispute.

Till date, there is no such TRIPS notification and to this extent, Natco’s application is doomed to fail. As of now, from the little information we have (see the LC update below), the only permission by Natco is a drug regulatory clearance to import fixed quantities of drugs. Clearly, this cannot amount to conclusive evidence that Nepal has a public health issue. We need to find out if Pfizer is selling in Nepal and if so, what price is it selling at? Unless there is a genuine public health problem, Natco shold not be permitted to uze this mechanism to make some quick profits–that is not the puropose of the Doha Declaration. Rather the interests of Nepal and its cancer patents ought to come first.

It just seems like a bad first case to bring under section 92A. And I am worried that a negative result here will dis-incentivise other generics from taking to this route and supplying it to patient populations in countries that face genuine public health issues.

Natco should have done its homework and procured the Nepal notification etc before bringing this case. Anyway, one cannot still predict the final outcome, as the facts are uncertain. LC has promised to put up all documents relating to this case and hopefully we’ll have more clarity on the merits of this dispute. As always, we salute those who work towards making the system a more transparent one.

Here is the comprehensive update from Chan Park of Lawyers Collective.

“The Delhi Patent Office held a hearing yesterday to determine whether under Indian law, a patent holder has the right to a hearing when an application for a compulsory licence for export is filed. Late last year, the Indian generic pharmaceutical company Natco had filed an application for a compulsory licence to allow it to produce a cancer drug, erlotinib, for export to Nepal. The Indian patent for this drug was granted to Pfizer and OSI Pharmaceuticals in July 2007. OSI entered into a marketing agreement with Roche for distribution of erlotinib outside the United States.

Indian law, under section 92A of the Patents Act, allows for compulsory licences on pharmaceutical products to be granted for export to countries with insufficient manufacturing capacity. This provision was included during the 2005 amendments to incorporate the WTO’s August 30 Decision, which provides a waiver of the requirement under Article 31(f) of TRIPS that products produced under a compulsory licence be predominantly for domestic use.

Section 92A, as drafted, makes no specific mention of the patent holder’s right to a hearing, and states, in relevant part, that the “Controller *shall,* on receipt of an application in the prescribed manner, grant a compulsory licence solely for the manufacture and export of the concerned pharmaceutical product to such country under such terms and conditions as may be
specified and published by him.” (emphasis mine)

Due to the public interest surrounding these proceedings, representatives from the Lawyers
Collective HIV/AIDS Unit and MSF Access Campaign attended the hearing. (Interestingly, counsel for the patentees, Mr. Pravin Anand, objected to our presence, claiming that this was a closed hearing that was not open to the public. He expressed concern that the Lawyers Collective was adverse to his clients on other matters, and had taken positions against “innovator” companies in the press, to the government, and in the courts. We replied that there was no provision in the Patents Act that required such hearings to be closed, and that it was in the public interest that such proceedings be open to the public. We further stated that we were not parties to the current proceedings, and the issue of whether anyone was adverse to his clients on other matters had no bearing on the right to observe these proceedings. Ultimately, Mr. Anand consented to our presence in the proceedings, with his objection to our presence placed on record.)

What follows is a brief synopsis of the proceedings, interspersed with a few clarifications on the Indian law as and when appropriate.

The patentees’ central argument that it was entitled to be heard during the consideration of Natco’s compulsory licence application was based on the premise that under both statutory and common law, the Patent Controller was required to grant the patentees a hearing before exercising any discretionary action adverse to their interests. To buttress its argument that the Controller was required to do so, the patentees pointed to provisions in the Patents Act that required the Patent Controller to grant a “patent applicant” or any “party to a proceeding” a hearing prior to exercising any discretionary power adversely.

They argued that there was no material difference between “patent applicant” and “patentee,” and therefore these provisions (section 80 and rule 129) obligated the Controller to grant a hearing before granting a compulsory licence under section 92A.

It should be noted, however, that the language of section 92A is mandatory, not discretionary, and the Controller is required, upon receipt of an application in the “prescribed manner,” to grant a compulsory licence for export.

The patentees also argued that under fundamental common-law principles of “natural justice” (similar to the doctrine of “due process” in other jurisdictions), an opportunity to be heard was required before any action adverse to the patentee’s interests was taken by the state.

Finally, the patentees argued that they were a necessary party to these proceedings, as the
Controller would need access to information in the patentees’ sole possession to determine what amounted to “adequate remuneration” for the compulsory licence.

The patentees pointed to a provision in the Patents Act that required the Controller to look to the “nature of the invention,” “the expenditure incurred by the patentee in making the invention,” and other factors in determining adequate remuneration for a compulsory licence.

This section (section 90) expressly limits its application to compulsory licences granted under a separate provision (section 84) of the Patents Act -one in which the patentee’s right to be heard is expressly recognised.

*****

Counsel for Natco, Mr. S Majumdar, responded by arguing that the history of the Doha Declaration and the 30 August Decision fully justified the differential treatment of compulsory licences for export under section 92A, in which no right of hearing is expressly provided, with the normal procedures governing compulsory licences (as provided under sections 84-92) in which the patentee’s right to a hearing is expressly recognised. (Even under these “normal” compulsory licensing provisions however, expedited measures for granting compulsory licences in situations of national emergency, situations of extreme urgency, or for public non-commercial use are available, and the requirement for providing the patentee with an opportunity to be heard can be dispensed with by the Controller in such circumstances.)

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 the 30 August Decision, when read with the Doha Declaration, evinced a policy that “when there is a need [for drugs produced under compulsory licence], there should be a rapid response.”

In support of its argument that there was no requirement to give a patentee the opportunity to be heard prior to the issuance of a compulsory licence, counsel for Natco pointed to Canada’s Access to Medicines Regime, which similarly does not grant the right of a hearing to the patent holder during the application process (section 21.04), but merely gives the patentee the right to challenge the validity of the compulsory licence after the fact in a federal court (section 21.14). Similarly, Natco argued, the patentees in India retained the right to challenge the grant of a compulsory licence in the courts if and when the compulsory licence was granted.

In response to the patentees’ argument that the Controller 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.

Responding to the patentees’ assertion that “patent applicant” and “patentee” were essentially the same, Natco pointed to the definition of “patentee” in the Patents Act to show that a “patent applicant” and “patentee” were distinct entities under the law, and thus the provisions relating to the use of discretionary power for patent applicant had no application to the current proceedings.

Finally, counsel for Natco argued that even the common law doctrine of natural justice recognised that the right to be heard was not absolute, and could be dispensed with in situations that required prompt action in the public interest. Counsel for Natco argued that this was precisely such a situation in which prompt action was required. Natco pointed out that its compulsory licence application was filed in December 2007, and that the intervention of the patentees had already delayed the application’s consideration by several months.

*****

On rebuttal, counsel for the patentees distinguished the comprehensive nature of Canada’s legislation from the spare language contained in section 92A. He pointed out the numerous safeguards contained in the Canadian legislation that ensured that the patentee would be treated fairly, such as the requirement that the applicant for the compulsory licence first attempt to obtain a voluntary licence (which Natco apparently had not done in this instance); and that the holder of a compulsory licence provide notifications to the patentee of the impending export of the product produced under the compulsory licence.

Counsel for the patentees argued that no such requirements were included in the Indian legislation, and in the absence of such comprehensive safeguards as contained in the Canadian legislation, the very least that the Controller could do was to allow the patentee to be heard during the application process to ensure fair treatment.

Counsel for patentees further argued that the “notice” by the Nepal government that Natco was relying upon was insufficient to amount to a formal notification of an intent to import drugs produced under a compulsory licence. He alleged that Natco, in its application for a compulsory licence, had merely submitted a letter from the Nepal government recommending that one consignment of erlotinib be approved for import from India during the period 2006-2007. He argued that this was insufficient to demonstrate Nepal’s intent to utilise the 30 August mechanism to import drugs produced under a compulsory licence. In contrast, he pointed to the formal notification provided to the WTO by Rwanda of its intent to utilise the paragraph 6 implementation.

*****

The hearing concluded, and the parties agreed to submit their written submissions to the Controller within seven days of the hearing.

We are in the process of attempting to obtain copies of Natco’s application and other related papers from the Patent Office under India’s Right to Information Act. They will be posted on our website (www.lawyerscollective.org) as and when we obtain them.

Shamnad Basheer

Shamnad Basheer

Prof (Dr) Shamnad Basheer founded SpicyIP in 2005. He is currently the Honorary Research Chair of IP Law at Nirma University and a visiting professor of law at the National Law School (NLS), Bangalore. He is also the Founder of IDIA, a project to train underprivileged students for admissions to the leading law schools. He served for two years as an expert on the IP global advisory council (GAC) of the World Economic Forum (WEF). In 2015, he received the Infosys Prize in Humanities in 2015 for his work on legal education and on democratising the discourse around intellectual property law and policy. The jury was headed by Nobel laureate, Prof Amartya Sen. Professional History: After graduating from the NLS, Bangalore Professor Basheer joinedAnand and Anand, one of India’s leading IP firms. He went on to head their telecommunication and technology practice and was rated by the IFLR as a leading technology lawyer. He left for the University of Oxford to pursue post-graduate studies, completing the BCL, MPhil and DPhil as a Wellcome Trust scholar. His first academic appointment was at the George Washington University Law School, where he served as the Frank H Marks Visiting Associate Professor of IP Law. He then relocated to India in 2008 to take up the MHRD Chaired Professorship in IP Law at WB NUJS, a leading Indian law school. Prof Basheer has published widely and his articles have won awards, including those instituted by ATRIP and the Stanford Technology Law Review. He is consulted widely by the government, industry, international organisations and civil society on a variety of IP issues. He also serves on several government committees.

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