Patent

Natco’s Compulsory Licence: Professional Negligence?


I’ve been thoroughly perplexed over the last few days. Why on earth did Natco apply for a compulsory license? Particularly when the process is susceptible to considerable delays and it could be a while before they get a clear signal to go ahead and make generic copies of Bayer’s patented Nexavar.
And even when the permission does finally come through, they have to part with some of the moolah in the form of royalties to Bayer. Wouldn’t it have been far simpler for them to knock out the patent directly and not pay any royalties at all? But well, you may exclaim: Nexavar is covered by a strong patent, not easily amenable to a validity attack!
So what, I retort? Whoever asked you to challenge the patent on merits? Thanks to some fine jurists at the IPAB, Indian law now permits you to revoke any patented drug on the ground that the price is too high, since such drugs are a potential threats to our public order!

Don’t believe me? I suggest you re-examine this IPAB decision that is now in dispute at the Supreme Court.

You and I may disagree with this jurisprudence, but unless it is reversed, it stays as the law of the land. It is for this reason that I argue that Natco’s lawyers ought to be held culpable for professional negligence for failing to advocate this far simpler revocation route to their client.

In fact, almost all drug patents held by MNC’s could be done to death through this route. Let’s make the most of it while it lasts and knock down all these evil pharma patents before some well meaning judge comes along to take the IPAB to task for this flight of legal fancy?

ps: image from here

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.

8 comments.

  1. AvatarKshitij

    Shamnad,

    Just a brief comment here. How can we be so sure that no such invalidity proceedings is underway at the IPAB?

    Br,
    Kshitij

    Reply
  2. AvatarShamnad Basheer

    and who said anything about the surety or otherwise of such proceedings at the IPAB? the post simply exposed this possibility. if you know of any such proceedings, why don’t you be a little generous and share the knowledge?

    Reply
  3. AvatarKshitij

    Shamnad,

    I just wanted to point out that the arguments made by you in your post are very strong. I am totally unaware of NATCO’s counsels or the proceedings for that matter. But, as a responsible follower of your blog, which has developed a sacrosanct following over the years, had the above point to make.

    Br,
    Kshitij

    Reply
  4. AvatarShamnad Basheer

    Kshitij,

    I thought you meant invalidity proceedings in general based on the pricing ground. As for Natco filing something on these lines, no….to the best of my knowledge, there are no such proceedings. cipla though has a post grant oppn pending against bayers’ nexavar.

    Reply
  5. Avatarrajita sharma

    My random thoughts:

    1. Shamnad makes a valid point that part of the chaos is the way matters are advised and litigated. To some extent the examiners and the judges can only judge on the facts and the arguments presented to them. But that is just one part.

    2. The matters are generally badly argued. I have yet to read a decision that has coherent reasoning. It appears that the decision is arrived at (generally on the sentiment that the patentee is an exploiter who will use the monopoly to profit at the expense of the poor in India)and the reasons then tailored around that.

    3.The challenges to the pharma applications has less to do with merits or altruism or even preventing competition but a lobby for protectionsim. I am a great believer in preventing evergreening or patent trolls but am critical of the manner in which the Indian patent offices and the judiciary currently function.

    4.Perhaps there is merit in the challenges, given that the original compounds were not patented in India, but the authorities and the Courts have unfortunately shied away from their duty to provide clear guidance and precedents. The practitoners have floundered in there duty to assist the courts in an honest, fair, diligent and responsible way. They should not dabble unless they have the right level of expertise.

    5.On Compulsory Licence. I agree that the Controller’s office cannot and should not become the price controlling/licensing authority. Add to this the pre-grant oppositions (to which there is no appeal), the Controller is being vested with autority and power way beyond what was intended. It is not democratic.

    6.Royalties are generally assessed on the basis of a flat fee charged by the patent owner (generally where the licensor is in the business of licensing which Bayer may not be) or on the percentage of sale price/profit/volume etc. Bayer’s normal rate may be considered to be too high and therefore on the basis of the sale price of the drug in India by Natco, it may be a nominal sum. So, not a bad strategy. Further, it may also in some way prevent competition and as a licensee, Natco will be protected from the consequences of third party attacks.

    7. On the Revocation. Natco could have filed a declaratory action claiming non-infringement (although it is very likely that they do infringe and also would be ages before the case would be heard). Revocation is not that simple as now Natco will have the onus to prove lack of novelty and/or obviousness (well at least that is how it works in the normal world) and will need to adduce evidence on obviousness and unlike the pre-grant oppositions, this could end up before an enlightened judge.

    7. Lastly, I have not seen a single Indian judgement in which the tests/steps on obviousness have been set out, with the proper “skilled in the art” test at the priority date (without the hind sight view), with relevant comments on the expert evidence. If any one can point me to one, I will be grateful.

    Reply
  6. AvatarShamnad Basheer

    Dear Rajita:

    You are absolutely right. Indian patent law lacks clarity in several quarters. Several issues have not made it to the judiciary—and even if they have, the decisions have been far from illuminating. As you rightly point out, there is not a single decn that spells out the clear Indian std for obviousness. Or as to how would qualify as “the person skilled in the art”. Or the kind of analysis required to establish the prowess of a person skilled in the art—the kind of evidence, burden of proof, standard of proof etc etc. And as for 3.d, the less said the better, as there are several areas where the patent office still requires clarity. I was hoping that the Novartis SC petition would proceed as scheduled for this one reason alone. We need more guidance from the higher courts on several issues. Else, we’re stuck with opinions that are often conflicting and inconsistent. And damaging to Indian patent jurisprudence in the long run…

    Reply
  7. Avatarrajeev

    Dr Basheer
    Warm regards
    Sir, I do not think that the judgment of IPAB is a flight to fancy rather it is a judgment which is close to the ground than many of the other orders.
    Kindly reflect on how an order is developed by a hearing court. Once the issues are framed the contesting parties come up with their evidences once they are recorded the case proceeds towards arguments, replication and finally to verdict. It is a cardinal principal that the point referred in support/or against must be judicially addressed in context to issues being adjudicated upon.
    What IPAB has done is to give its judgment in respect of points raised viz. novelty & inventive step in respect of invention to which it agreed, efficacy interpreted in terms of therapeutic efficacy, correlating between inventive step and therapeutic efficacy . Based on this it has finalized its interpretation of issues. It is only in the finality of its order addressed the issue of pricing. Your contention that the verdict opens the avenue for existing patents to be challenged is contentious. Even if it challenged on the basis of pricing the very first thing to be discussed is public order. I reserve discussion on this for later. Pricing per se may be challenged to be TRIPS non-compliant but it the total context of the patent regime a case may still be made out regarding monopoly abuse.
    Also may I point out that if the IPAB had chosen to leave out the contention of pricing, the repercussion would have been an order review. And in case it would have passed an order about the insularity of patent and pricing I think it would have been submerged with the allegations about not being in synchronous with the ACT objectives and challenged.
    R.K.Jain
    Patent Agent

    Reply
  8. AvatarShamnad Basheer

    Dear Mr Jain:

    You appear to have misunderstood the point of the post and the various issues raised. My “flight of fancy” theory only applied to the IPAB’s proposition that patents can be denied no grounds of excessive pricing. That has no credible basis in Indian law, as it stands now.

    Reply

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