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India: No compulsory licence without reasonable efforts

In October 2013, the Controller General of Patents rejected M/s BDR Pharmaceuticals International's application seeking a compulsory licence for Bristol Myers Squibb's patent covering the active pharmaceutical ingredient dasatinib, which is used to treat patients with chronic myeloid leukemia (CML). The application was rejected at a prima facie level due to the applicant's failure to make reasonable efforts to seek a voluntary licence.

While the applicant had approached the patentee for a voluntary licence, when the patentee sought clarifications on many points, the applicant failed to provide any responses. Almost one year later, the applicant directly filed an application seeking a compulsory licence.

The Controller held that a patentee is entitled to seek clarifications regarding the credentials and capabilities of the potential licensee as well as the terms and conditions of such a licence, since the grant of a licence is a very important decision for a patentee. The Controller rejected the argument of the applicant that this would result in patentees indefinitely delaying the application for a compulsory licence. The Controller noted that as per the statute, efforts are to be made for a reasonable period and six months is ordinarily considered as being reasonable. In the opinion of the Controller, the requirement to make "reasonable efforts" reflects legislative wisdom that the patentee may also have certain legitimate concerns on which clarifications may be sought.

In responding to the applicant's contentions, the Controller noted that the patentee's actions or intentions of not granting a voluntary licence did not relieve the applicant of his obligation, under the Patents Act, 1970, to sincerely negotiate the terms for voluntary licence for a reasonable period. The Controller stated that the applicant had not demonstrated that it had made "reasonable efforts" as it had not even bothered to reply to the queries of the patentee.

Interestingly, in May 2013, after the application for a compulsory licence was filed, the Controller of Patents notified the applicant that it had not made a prima facie case, granting the applicant the opportunity to make its submissions. Subsequently, the applicant responded to the patentee's queries. The Controller refused to take this subsequent conduct into account since that would be unfair to the patentee. The Controller was of the view that once an application for a compulsory licence was actually filed, the patentee may likely be coerced into accepting a voluntary licence being under the "shadow" of the pending compulsory licence application. The Controller opined that it cannot grant such an unfair advantage to the applicant.

This decision is a crucial one, which highlights the need for compulsory licence applicants to make sincere efforts to seek a voluntary licence. This well-reasoned order of the Controller will go a long way in ameliorating the concerns of the pharmaceutical industry in relation to threats of compulsory licence.

V Lakshmikumaran

Lakshmi Kumaran & Sridharan
B6/10 Safdarjung Enclave
New Delhi 110029
Tel: +91 11 41299800
Fax: +91 11 41299899


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