“Bayer v. Natco”

• 1. While filing an application for a compulsory license, it is for the applicant to make out a prima facie case that one or all the grounds stated in Sec. 84(1) of the Patent Act are applicable in respect of the patent for which the license is sought.

• 2. It is only on prima facie satisfaction of the Controller that the patent holder is called upon to file its opposition to the grant of the compulsory license to the applicant.

• 3. It is for the patent holder in its opposition to aver and thereafter lead evidence to show that the reasonable requirement of the public with regard to the patented drug has been satisfied.

• 4. The reasonable requirement of the public has to be considered by the authorities in the context of number of patients requiring the patented drug. This exercise can never be carried out on a mathematical basis.

• 5. The obligation to meet the reasonable requirement of the public is of the patent holder alone either by itself or through its licensees.

• 6. Section 84(7) of the Patent Act provides a fiction which deems that the reasonable requirement of the public is not satisfied if the demand for the patented article is not met to an adequate extent. The aspect of “adequate extent” varies. In respect of medicines, the adequate extent has to be 100 %, i.e. to the fullest extent, as medicine has to be made available to every patient and cannot be sacrificed for the rights of the patent holder.

• 7. Whether the patented drug is available to the public at a reasonably affordable price must be determined on the basis of the relative price being offered by the patent holder and the applicant after hearing other interested parties opposing the application.

• 8. No fault can be found with the concept of dual pricing when determining the reasonably affordable price. In fact, the concept of dual pricing would appear to fit in Sec. 84(1)(a) of the Patent Act which covers a situation where the reasonable requirement of a public with respect to the patented invention is not satisfied. This situation would arise not only on account of sufficient patented drug not being available in adequate quantity but it can also arise on account of the price of the patented drug being so high that a large section of the public is not able to access the patented drug.

• 9. Whether the invention is being worked in the territory of India has to be looked at through the prism of Sec. 83 of the Patent Act which contains the legislative guidelines to govern the meaning of the words “worked in the territory of India”. It is for the patent holder to show that the patented invention (drug) is worked in the territory of India by manufacture or otherwise. The contention that “worked in India” must in all cases mean only manufactured in India is not acceptable.

• 10. Section 86 of the Patent Act, which provides for adjourning application for compulsory license, has to essentially satisfy two conditions which are as follows:

  • the time which has lapsed since the patent was granted and when an application for compulsory license was made was insufficient to enable the patent holder to work the patented drug in India on a commercial scale; and

  • the patent holder should have taken steps towards working the patented drug in India on a commercial scale with promptitude.

• 11. In terms of Art. 31 of the TRIPS Agreement, it is provided that the patent holder shall be provided adequate remuneration while granting compulsory license. Similar provision has been incorporated in Sec. 90 of the Patent Act, which inter alia provides that while settling the terms and conditions of the compulsory license, the Controller has to ensure that the royalty and other remuneration, if any, paid to the patent holder should be such as would reasonably cover the expenses incurred by the patent holder in making and/or developing and/or maintaining the patented invention.

• 12. Public interest is and should always be fundamental in deciding the grant of a compulsory license for medicines/drugs.