Compulsory licensing in India is a relatively under-explored area of legislation due to a lack of precedent. While the TRIPS Agreement and the Paris Convention provide some guidance, this article focuses on the impact of judicial opinions by Indian courts. The factual scenarios and standards considered by the judiciary indicate a propensity towards public welfare, with sufficient safeguards to prevent abuse of the law.
Compulsory licensing is an agreement between a willing applicant and an unwilling patent holder, allowing the production and sale of the patented product under specific conditions:
This mechanism serves as an exemption to the protection granted by intellectual property rights, allowing third parties to use a patentee's rights without their approval. The landmark case of Bayer Corporation v. Natco Pharmaceuticals Ltd. was the first instance where a compulsory license was granted in India.
In this case, Natco Pharmaceuticals, an Indian generic drug manufacturer, sought a compulsory license for Sorafenib (Nexavar), a cancer drug patented by Bayer. The license was granted due to Bayer's failure to make the drug accessible and affordable to the public.
The tribunal evaluated Bayer's drug deliveries and found that the supply was insufficient. Bayer imported only 200 bottles in 2008 and 593 bottles in 2011, which was far less than the estimated need for 23,000 patients. Bayer argued that only 8,800 patients required the drug, but even this lower number was not adequately met.
Bayer contended that Cipla's infringing production compensated for any shortages. However, the court rejected this argument, noting that Bayer could not benefit from Cipla's sales. Additionally, Bayer's supply was minimal even before Cipla began production in 2010.
Nexavar was priced at INR 2,80,000 per week, which was prohibitively expensive for most patients. Bayer argued that fair pricing should consider both the customer and the manufacturer, including rewards for innovation and R&D costs. The court, however, emphasized that differential pricing could have made the drug more affordable. Natco's price of INR 10,000 per week was deemed reasonable and accessible.
To be Worked in India
The court clarified that importation was not sufficient for a patent to be considered "worked" in India. The stringent requirement for local production was highlighted, raising questions for companies that outsource manufacturing or rely on territorial availability.
Before applying for a compulsory license, the following prerequisites must be met:
These prerequisites ensure that the law is not exploited and maintain a balance between public interest and patent protection.
Following the Natco case, it was anticipated that more compulsory licenses would be issued. However, this has not been the case. Subsequent applications, such as in Roche v. Emcure Pharmaceuticals and BDR Pharma v. Bristol-Myers Squibb, have been denied due to the failure to meet necessary criteria or lack of evidence of public need.
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