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Indian Patent Office comes in spotlight by granting first Compulsory License. Natco Pharma Limited becomes CL holder with condition to pay royalty at the rate of 6% of the net sales of the drug “Nexaver” {‘Sorafenib’ (Carboxy Substituted Diphenyl Ureas) which is useful in the treatment of advanced stage Hepatocellular Carcinoma-HCC (liver cancer) and Renal Cell Carcinoma-RCC (kidney cancer)} on a quarterly basis to Bayer Corporation.

Aggrieved by the controller’s decision Bayer Corporation has filed appeal and requested for granting stay before the Intellectual Property Appellate Board (IPAB). Bayer failed to make out a prima facie case for the grant of stay but succeeded to increase the royalty rate only by one percent.

Bayer Corporation raised issue about the presence of CIPLA who has been selling the drug Soranib, same as their drug at the very low prices. Bayer argued that because of CIPLA’s presence and low prices drug they were unable to work the invention and also asked for the adjournment under section 86(1) (i.e. Power of Controller to adjourn applications for compulsory licenses, etc., in certain cases ) of the Indian Patents Act, 1970 which also was rejected as the prima facie case has not been made out to grant the stay. Also, the admission of Bayer itself about supplying of drugs by CIPLA to satisfy the needs of the public were became the tacit element of “digging ones grave” for the rejection. The board gave an opinion that it is the patentee’s duty to make the invention available to the public at reasonably affordable prices and he can not discharges from the duty by stating that the other company (infringer) is fulfilling what he has duty to do.

The statements of Bayer Corporation was criticized by the board and stated “We are unable to understand whether, CIPLA rides with them or CIPLA is its rival, whether CIPLA is a friend or foe” and therefore board rejected to accept this mutually inconsistence stand. Further, board explained “If stay is granted, it will definitely jeopardise the interest of the public who need the drug at the later stage of the disease, since it is admitted that this drug improves the quality of life and therefore, the right of access to affordable medicine is as much a matter of right to dignity of the patients and to grant stay at this juncture would really affect them”.

The royalty of 6% for the CL was granted with accordance of recommendations of the United Nations Development Program.

In an appeal challenging the compulsory license granted by the Controller, Bayer argued that the decision of the Controller was vitiated by several errors and they did not got chance to work the invention. Also, Bayer Corporation had drawn the attention towards its Patient Assistance Program (PAP) and Health Insurance Schemes ameliorate factors. Bayer further included that working of invention was limited because of entry of other manufacturer (CIPLA) and asked for the adjournment for working of the invention. Mainly Bayer Corporation had an objection for the royalty rate of 6%, where they submitted that the retailers and stockiests were getting margins around 30% and that was substantially noticeable higher than the royalty awarded to the inventor.

By taking consideration of the all the arguments given by the Bayer the board stated that the patent was worked locally merely by importing the drug and hence the patentee must show why it could not be locally manufactured. A mere statement to that effect was not sufficient, there must be evidence. Though, by referring all pleadings and evidences, board granted one percent increase in the royalty granted by the controller to meet the ends of justice.

Further, in the end the board specifically added “We repeat, these proceedings are neither against the inventor, nor against the compulsory license applicant, but purely based on public interest and hence appeal in other cases except royalty has been dismissed”.


   Contributed by : Kavita Shah - Technical Expert
   Designed By : Vikash Singh

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