India’s Supreme Court declines to hear compulsory licence appeal

Last Friday, the Supreme Court handed down a two-sentence long order rejecting Bayer’s petition for special leave for appeal of the compulsory licence granted for its Nexavar cancer drug.

In July, the Bombay High Court held that there was no reason to overturn the compulsory licence originally granted by the patent controller and later upheld by the Intellectual Property Appellate Board.

India’s patent law has several provisions that allow for compulsory licences. Section 84 of the Patents Acts allows generic manufacturers to apply for a compulsory licence if it can show that: (a) the reasonable requirements of the public with respect to the patented invention have not been satisfied, or (b) that the patented invention is not available to the public at a reasonably affordable price, or (c) that the patented invention is not worked in India.

The patent controller sided with Natco on all three grounds, granting the licence with a royalty rate of 6% of net sales. The IPAB in March 2013 upheld the decision, though it questioned the patent controller’s holding that a drug is not being worked if it is imported into India rather than produced domestically. The Bombay High Court again upheld the compulsory licence and made a point of agreeing with the IPAB on the issue of whether importation constitutes the working of a patent.

A possible but unlikely challenge

Though the Supreme Court denied the special leave petition, Bayer may still choose to file a review petition with the Supreme Court. Such a petition would be reviewed by the same bench that handed down the original denial, which may be overturned if Bayer can prove that there is “apparent error”. If this is denied, the Supreme Court may further consider a curative petition to prevent abuse of process or to cure gross miscarriage of justice.

However, one India lawyer suggests that this will be a difficult to get the Supreme Court to reverse its own decisions absent a strong case. One of the more high-profile examples, he explains, is the so-called 2G spectrum scam cases, where the Supreme Court agreed to review parts of its own decision to cancel 122 licences for spectrum for use with wireless communications.