In an order dated 12 December 2014, the Supreme Court (SC) has dismissed Bayer’s Special Leave Petition filed against the order of Bombay High Court dated 15 July 2014, confirming the Compulsory License (CL) granted to Natco Pharma Ltd (Natco) in respect of patent No 215758 held by German drug major Bayer Corporation (Bayer) for the cancer drug sold under the brand name of Nexavar.

Background

Nexavar is a kidney and liver cancer drug which is also known by the generic name, Sorafenib tosylate (Drug). Natco was granted the CL under the provisions of Section 84 of the (Indian) Patents Act, 1970 (Act) for the Drug owned by Bayer.

Bayer was granted the patent for the Drug on 3 March 2008. Natco had initially approached Bayer for a license to manufacture and sell the said Drug, but when this did not materialize, Natco filed an application for a CL on 29 July 2011 under Section 84 (1) of the Act. The Act provides that an application for the grant of a CL, can be made to the Controller at any time after 3 years from the grant of a patent provided the applicant has already made an effort to obtain a voluntary license from the patentee. The grounds under which a compulsory license can be granted are as follows:

  • The reasonable requirements of the public have not been satisfied;
  • The patented invention is not available to the public at a reasonably affordable price; or
  • The patented invention is not worked in the territory of India.

In his decision dated 9 March 2012, the Controller found that all three conditions above were satisfied in this case.

Following the Controller’s decision to grant the CL, Bayer appealed to the Intellectual Property Appellate Board (IPAB) against the Controller’s decision. IPAB upheld the grant of the CL but increased the royalty payable by Natco to Bayer from 6% to 7% of the net sales of the Drug.

Following the IPAB’s decision, Bayer approached the Bombay High Court which upheld the Controller’s decision.

Order

The SC in its dismissal order, while keeping all questions of law open, has specified that in view of the facts of the case, they are not inclined to interfere.

Khaitan Comment

Patent holders now need to take appropriate precautions while negotiating voluntary licenses with counterparties so as to avoid a scenario where this forms the pedestal for a compulsory license application.