Case Note & Summary
The petitioner, Bayer Corporation, a US-based pharmaceutical company, held a patent for the drug Sorafenib Tosylate, sold under the brand name Nexavar, used for treating kidney and liver cancer. The third respondent, Natco Pharma Limited, applied for a compulsory license under Section 84 of the Patents Act, 1970, alleging that Bayer had not made the drug available to the public at a reasonably affordable price, had not worked the invention in India, and that the reasonable requirements of the public were not satisfied. The Controller of Patents granted the compulsory license on 9 March 2012, which was upheld by the Intellectual Property Appellate Board (IPAB) on 4 March 2013. Bayer challenged these orders by way of a writ petition under Article 226 of the Constitution of India before the Bombay High Court. The court examined the three conditions under Section 84: (a) reasonable requirements of the public not satisfied, (b) patented invention not available at a reasonably affordable price, and (c) patented invention not worked in India. The court found that Bayer had imported only small quantities of the drug, priced at Rs.2,80,000 per month, making it unaffordable for most patients. Natco offered the generic version at Rs.8,800 per month. The court held that 'worked in the territory of India' means manufacturing to a reasonable extent, not mere importation. The court also noted that this was the first compulsory license case after India's TRIPS compliance and the Doha Declaration. The court dismissed the petition, upholding the compulsory license granted to Natco, subject to the terms and conditions set by the Controller, including a royalty of 6% of net sales to Bayer.
Headnote
A) Patents Act - Compulsory License - Section 84 - Reasonable Requirements of Public - The court examined whether the reasonable requirements of the public with respect to the patented drug Nexavar were satisfied. It held that the patentee's import of the drug at a high price and limited quantity did not meet the public's needs, as only a small fraction of patients could afford it. The Controller and IPAB correctly found that the reasonable requirements were not satisfied. (Paras 2-10) B) Patents Act - Compulsory License - Section 84 - Reasonably Affordable Price - The court considered whether the patented drug was available at a reasonably affordable price. It held that the price of Rs.2,80,000 per month for a course of treatment was not reasonably affordable, especially when compared to the generic price of Rs.8,800 offered by Natco. The patentee's argument that affordability must be assessed in relation to the public generally was rejected. (Paras 11-15) C) Patents Act - Compulsory License - Section 84 - Working of Patented Invention - The court examined whether the patented invention was worked in the territory of India. It held that 'worked' means manufactured to a reasonable extent in India, and mere importation does not constitute working. The patentee's failure to manufacture the drug in India and reliance solely on importation justified the grant of compulsory license. (Paras 16-20) D) Patents Act - Compulsory License - Section 84 - Public Health and TRIPS - The court considered the balance between patent rights and public health, referencing the TRIPS Agreement and Doha Declaration. It held that the compulsory license provisions are designed to prevent abuse of patent rights and to ensure access to essential medicines at affordable prices. The grant of compulsory license in this case was consistent with India's international obligations. (Paras 21-25)
Issue of Consideration
Whether the conditions for grant of compulsory license under Section 84 of the Patents Act, 1970 were satisfied, particularly whether the reasonable requirements of the public were not met, the patented drug was not available at a reasonably affordable price, and the patented invention was not worked in the territory of India.
Final Decision
The Bombay High Court dismissed the writ petition and upheld the orders of the Controller and IPAB granting compulsory license to Natco Pharma Limited for the patented drug Nexavar, subject to the terms and conditions including a royalty of 6% of net sales to Bayer.
Law Points
- Compulsory license
- Section 84 Patents Act 1970
- reasonable requirements of public
- reasonably affordable price
- working of patented invention in India
- TRIPS Agreement
- Doha Declaration
- public health
- patentee's obligations
