BDR PHARMACEUTICALS INTERNATIONAL PVT. LTD. vs. BRISTOL MYERS SQUIBB COMPANY[25]

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- APPLICATION FOR COMPULSORY LICENCE REJECTED

 

In 2013, BDR Pharmaceuticals International Pvt. Ltd. [hereinafter referred to as the Applicant] filed an application for a compulsory licence under Section 84 of the Act, for Indian  patent no. 203937 titled ‘A COMPOUND 2-AMINO-THIAZOLE-5-CARBOXAMIDE’.

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In May, 2013, the Controller issued a notice to the Applicant informing that no prima facie case was made out upon consideration of the application. Thereafter the Applicant requested to be heard in the matter and the same was allowed by the Controller. In a detailed order dated October 29, 2013, the Controller rejected the application for compulsory licence. A brief discussion of the order and the significant observations of the Controller are as follows -

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Person interested -

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Based on the submissions made by the Applicant, the IPO noted that it was prima facie borne out that the Applicant was a person interested and had the capacity to undertake the risk in providing the capital and working the invention, if the application for a compulsory licence were to be granted, as the Applicant had his own manufacturing and marketing infrastructure.

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Applicant’s efforts to obtain a voluntary licence –

 

The Controller considered the communication between both parties, specifically, one letter dated February 2, 2012 vide which the Applicant requested a voluntary licence from the Patentee for said patented drug and one letter dated March 13, 2012 vide which the Patentee responded to the Applicant’s letter and requested further information including but not limited to the details that demonstrate the ability of the Applicant to consistently supply high volumes of the patented drug in the market, any factors that may jeopardize Patentee’s market position, quality related facts,  etc. The Controller noted that the Applicant took the Patentee’s response as ‘clearly indicative of the rejection of the application for voluntary licence’ and thus, the Applicant did not pursue the matter and made no further efforts to arrive at an amicable settlement with the Patentee. It is imperative to note that the Controller in the order specifically clarified that ‘a specific rejection letter of the offer made by the applicant to the patentee’ was not required to establish that sufficient efforts have been made by the Applicant to obtain a voluntary licence. In fact, the Controller reiterated the contents of the notice (May, 2013) and stated that the lack of prima facie case was based on the fact (not limited to) that “more than four and a half months remained unutilized out of the ‘reasonable period’ prescribed by the legislature for the purpose of mutual confabulations but the Applicant chose not to take any action during this precious time period which was available to the Applicant”. The Applicant among other submissions in this regard, stated that the Patentee’s request for further information was clearly indicative of unfair exploitation of the provision of Section 84(6)(iv) of the Act and that the Patentee would have misused such information in the (ongoing) infringement litigation filed by the Patentee against the Applicant. Further, the Applicant submitted that such request for further information was a tactic to indefinitely delay the application for compulsory licence for want of specific denial from the Patentee. Specifically addressing this misplaced contention, the Controller clarified that the above-said provisions clarified beyond doubt that a Patentee cannot indefinitely prevent an Applicant for voluntary licence for making an application for a compulsory licence, and in fact, such delay can at most be for a period of six months from making an application for compulsory licence.

 

With respect to the queries raised by the Patentee in the response letter (March 2012), the Controller held the same to be reasonable. Further, the Controller specifically noted that the Applicant had not specifically highlighted any query that would jeopardize the Applicant before the IPO or the Court. Thus, the Controller refused to accept the ‘mere argument’ submitted by the Applicant without any justification or reasoning. Further, in light of the communication undertaken by the Applicant with the Patentee after filing the application for compulsory licence (in furtherance of the earlier communication for voluntary licence to which the Applicant did not respond), the Controller noted such communication as clearly indicative of the Applicant’s realization of the mistake and an attempt to justify the early inaction and consequently, the same being an afterthought.

 

It is imperative to note that the Controller specifically and concretely emphasized the duty cast upon an applicant for a compulsory licence to ‘make efforts to obtain a licence from the Patentee on reasonable terms and conditions’ was absolute, inflexible and without any exceptions. The Controller held the conduct of the Applicant in sending a letter to the Patentee (dated February 2, 2012) for a voluntary licence and thereafter not responding to the Patentee’s reply (dated 13th March 2012) cannot be termed as “efforts” and therefore would not satisfy the duty imposed on the Applicant under the provision of Section 84(6) of the Act.

 

Concluding the above discussion, the Controller momentously held that “while a patentee may try to prolong the process of mutual deliberations by raising unnecessary queries, he was also entitled to satisfy himself regarding the credentials and capability of the applicant for a voluntary licence as well as the terms and conditions. The decision to grant a voluntary licence, particularly on a subject-matter covered by a patent, is an important decision for a patentee. While, it is possible that some of the queries raised by the patentee may not be strictly reasonable, it is natural that the patentee may seek additional information from the requesting party to satisfy himself about the credentials and capability of the said party.”

 

The above clarification comes as a saving grace to Patentees who have put considerable time, efforts and monetary investments into researching, developing and patenting their invention and the same acts as a much required acknowledgement of their rights with respect to granting or refusing licences.

 

Further, the Controller held that even if the Applicant was under an impression that the Patentee was engaging in delaying tactics, the act of not replying at all to the Patentee's reply (March 2012) is unexplainable as it goes against the golden thread apparently visible in Section 84(6)(iv) of the Act. The Applicant ought to have appreciated that the provisions relating to compulsory licence are to be invoked as the last resort i.e. if the mutual deliberations do not lead to a result within six months, in accordance with the scheme of the law.

 

Thus, the Controller laid a strict test for the duty imposed by way of the above-mentioned provision, on the Applicant to undertake ‘efforts’ to obtain a voluntary licence from the Patentee and the same was not to be treated or interpreted as a mere formality.

 

In light of the above, the Controller held that the Applicant did not make efforts to obtain a licence from the Patentee on reasonable terms and conditions.

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Matters subsequent to the making of application –

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After receiving the IPO’s notice dated May 04, 2013, the Applicant responded to the Patentee’s reply (March 2012) on May 10, 2013 i.e. after a noticeable delay of about 14 months. The Applicant thereafter filed a petition under Rule 137 of the Patents Rules, 2003, requesting the Controller to take on record the communication between the Applicant and the Patentee subsequent to the filing of the application for compulsory licence. The Applicant substantiated the above request by submitting that the provision of Section 84(6) of the Act which stipulated that the Controller “… shall not be required to take into account matters subsequent to the making of the application”, was only applicable with respect to the Patentee.

 

The Controller discussed at length the relevant portion of Section 84(6) of the Act and held that contrary to the Applicant’s assertion, the relevant provision was also applicable to the Applicant and not only the Patentee. In light of the same, the Controller held that considering such subsequent communication would amount to granting an undue advantage to an Applicant seeking a compulsory licence, empowering him to file an application for compulsory licence and simultaneously enter into negotiations with the patentee. In such a case, the applicant would always have an undue advantage and the patentee will always be prejudiced, which is against the underlying intent behind the said clause.

 

Conclusively, the Controller did not go into the merits of the Applicant’s submissions under Section 84(1) of the Act and held that the “deliberate intent on part of the Applicant to refrain from entering into any kind of dialogue with the Patentee for the purpose of securing the grant of a voluntary licence, and the exercise of a deliberate choice to only invoke the provisions relating to compulsory licences without taking the requisite steps laid down by the law, cannot be classified as an “irregularity in procedure/timeline”, which can be waived or condoned or declared to be not applicable”.

 

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[25] C.L.A. No. 1 of 2013

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