Patent

Natco’s Doha CL Application: Patent Office Rules in Favour of Pfizer


SpicyIP just learnt that the patent office issued a decision in the Natco “Doha style” compulsory licensing application yesterday. See here for a background to this dispute.

In short, the dispute revolves around a “Doha style” compulsory licensing application filed by Natco who argued that in view of a public health problem in Nepal, it ought to be granted a compulsory license to export generic copies of Pfizer’s patented anti cancer drug, Sutent (and Roche’s patented drug, Tarceva) to Nepal.

It is important to note that this is not a decision on the main merits of the dispute. Rather, it is on whether or not the patentee, Pfizer has the right to be be heard. In a well reasoned judgment running into 13 odd pages, the Assistant Controller of Patents, Hardev Karar (who we predicted in our earlier post would render a “well reasoned” decision) ruled that Pfizer has the right to be heard.

Audi Alteram Partem (Right to be Heard)

In the interests of “transparency” and because we didn’t really understand as to how a hearing or two might seriously delay a Doha style application, SpicyIP advocated such a right to hearing in a previous post:

“While a strict reading of the section does not permit a hearing, the denial of such opportunity could result in a writ petition from Pfizer/Roche alleging that principles of natural justice (audi alteram partem) had been violated. Particularly since the patent office has to decide on appropriate royalty rates. Without there being a pre-determined fixed formula in India (unlike Canada), it may be difficult to counter Pfizer/Roche’s contention that the absence of a hearing/representation (that might have helped establish the “economic value” of patent and the impending CL), seriously prejudices the rights of Pfizer/Roche.”

For our readers with no legal background, “audi alteram partem” is a Latin maxim that literally translates to “hear the other side”. In other words, no adverse decision ought to be taken against the rights/interests of another party, without hearing that party.

We were therefore happy to find that the patent office endorsed our logic. The decision clearly states that in view of the principles of natural justice (audi alteram partem), the patentee ought to be heard. Particularly since section 92A envisages the framing of terms of the license and this the patent office felt could not be “fairly” done without hearing the patentee. The patent office notes in this regard that:

“….if the patentee is invited and allowed for arguments in the hearing for deciding grant of compulsory license under section 92(A), the applicants are not expected to suffer any loss. The arguments of the patentee shall be helpful in deciding the terms and conditions of the license and also may be helpful to avoid the abuse of provisions of section 92A.

….It may be observed that the requirements under section 92A impliedly demand the presence of the patentee. Therefore … the principle of audi alteram partem would be more beneficial for the administration of justice.”

During the course of the decision, the Asst Controller also noted that despite fixing a date for hearing, Natco itself requested an adjournment and to this extent, delayed the application process.

“Deficiencies” in Natco’s Application:

From a close reading of the judgment, it appears that part of the reason underlying the patent office decision to grant such a right to be heard stems from the various “deficiencies” in Natco’s application. The decision notes:

“In the instant case, the documents submitted by the applicant are not admissible because of the following reasons:

i) The letter issued by the government of Nepal, said to be permission for importation of patented pharmaceutical product is not in the language as recognised by Indian patent rules. Therefore, this letter cannot be considered as permission for import by Nepal government.

ii) The requirement for the importation of the patented drug from India has not been notified to the TRIPS Council by the Govt of Nepal.

iii) Rule 96 requires the applicant to set out the terms and conditions of the licence which he is willing to accept. The applicant has not complied with this requirement.”

No doubt, the above statements ought to have been made during the final disposal of the case and not at this stage, which was confined to adjudging whether or not the patentee has a right to be heard. However, these statements indicate that the patent office was concerned that the Doha CL process ought not to be abused by generic manufacturers that wished to make a quick buck. Therefore, the best way to ensure this was to hear the other side as well .

Here again, in our previous posts, I noted the relative weakness of Natco’s case (at least from what was publicly on record):

“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”.

Conclusion:

All in all, I think this is a sound order and such a right to hearing helps the patent office make a more informed decision on a new area of law.

Perhaps after a few applications have been made and decided upon, the government can formulate rules and standard terms (around royalty rates etc) as would prevent any delays in the processing of such applications. And perhaps even do away with the right to hearing altogether. And build in specific rules to prevent abuse of the legal process through endless adjournments, appeals etc.

This order may offer some relief to those that were concerned that the Indian patent offfice was heavily biased against multinational pharma patentees. It effectively demonstrates to them that the patent office is staffed with folks like Hardev Karar who are capable of rendering “fair” and “bold” decisions without falling prey to the excessive emotional rhetoric around pharmaceutical patents that one sees in India today.

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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