Onbrez patent infringement suit update: Cipla offers to pay Novartis reasonable royalty for patent

Recently, the Onbrez patent injunction appeal case came up for hearing. In an interesting twist, Cipla offered to pay Novartis a reasonable royalty fee, if it was allowed to continue selling generic version of Onbrez! Reportedly Novartis was not enthusiastic and flatly refused Cipla’s offer.

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As readers may remember in November 2014, Cipla had launched a low cost generic version of Novartis’ Onbrez (Indacetorol – a drug used to treat chronic obstructive pulmonary disease). Cipla had further petitioned to the DIPP and argued that chronic obstructive pulmonary disease has reached “epidemic” proportions and the Central Govt should exercise its powers under Section 92(3) (compulsory license – in cases of extreme emergency) and Section 66 (revocation of patents -generally prejudicial to the public) to revoke Novartis’ Onbrez patents. Cipla’s petition to DIPP can be accessed here. We had written about it here.

Shortly thereafter, in December 2014 the health ministry issued a statement stating that Cipla’s petition does not make a compelling case for revocation of Novartis’ Onbrez patents. Close on the heels of the health ministry’s statement regarding patent revocation, Novartis sued Cipla for infringing patents covering Onbrez. The Delhi high court (Justice Manmohan Singh) then granted temporary injunction restraining Cipla. However Cipla was aggrieved with the order and moved to court appealing the grant of injunction.

When the injunction appeal matter came up for hearing recently, Cipla suggested that it was willing to pay Novartis a reasonable royalty fee if it was allowed to sell generic version of Onbrez. Novartis refused Cipla’s offer. The case was heard by a bench of Justices Badar Durrez Ahmed and Sanjeev Sachdeva.

Cipla contended that “public interest outweighs everything” and if given the license, Cipla’s cheaper generic version would benefit patients immensely. I wonder whether the “public interest outweighs everything” argument is undermined by the availability of low cost, similar acting alternative drugs (salmeterol, formoterol)?

Furthermore, it is pertinent to note that Cipla did not apply for a compulsory license (CL) under section 84. Under the Indian patent law a potential CL applicant must first attempt to procure a voluntary license from the patentee. (Statutory requirements state that the CL applicant must have negotiated with the patent holder in good faith for a period 6 months at least). Instead Cipla petitioned DIPP and sought to revoke Novartis patents after launching its low cost generic version of Onbrez. On January 14, 2015, the court sought a response from Novartis on the plea of Cipla and has asked Novartis why a royalty arrangement cannot be worked out. I believe Onbrez patents cannot be construed as “technology/standard essential patents” like for instance nanotechnology patents. In the absence of an order for compulsory license, isn’t it the patentee’s prerogative to choose to license the patent? I wonder whether the court can compel the patentee to negotiate a royalty agreement?

Readers please do chime in with your comments!

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1 thought on “Onbrez patent infringement suit update: Cipla offers to pay Novartis reasonable royalty for patent”

  1. pratik chaudhari

    the stand of CIPLA has been like that of a menacing kid who will shout and back answer you, if you find faults in him. How can CIPLA even think of negotiating on the terms of royalty and allowing it to manufacture drug, after the wavering stand of invalidity of suit patent and compulsory licensing it together.
    Although the logic of public seems to be gulp-able, but haphazard granting of CL will kill the backbone of MNCs bringing pure Inventions in india.

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