[Ip-health] Natco's application for CL for Export - Hearing in the Delhi Patent Office

[chan park]

The Delhi Patent Office held a hearing yesterday to
determine whether under Indian law, a patent holder
has the right to a hearing when an application for a
compulsory licence for export is filed.  Late last
year, the Indian generic pharmaceutical company Natco
had filed an application for a compulsory licence to
allow it to produce a cancer drug, erlotinib, for
export to Nepal.  The Indian patent for this drug was
granted to Pfizer and OSI Pharmaceuticals in July
2007.  OSI entered into a marketing agreement with
Roche for distribution of erlotinib outside the United
States.


Indian law, under section 92A of the Patents Act,
allows for compulsory licences on pharmaceutical
products to be granted for export to countries with
insufficient manufacturing capacity.  This provision
was included during the 2005 amendments to incorporate
the WTO's August 30 Decision, which provides a waiver
of the requirement under Article 31(f) of TRIPS that
products produced under a compulsory licence be
predominantly for domestic use.


Section 92A, as drafted, makes no specific mention of
the patent holder's right to a hearing, and states, in
relevant part, that the "Controller *shall,* on
receipt of an application in the prescribed manner,
grant a compulsory licence solely for the manufacture
and export of the concerned pharmaceutical product to
such country under such terms and conditions as may be
specified and published by him." (emphasis mine)


Due to the public interest surrounding these
proceedings, representatives from the Lawyers
Collective HIV/AIDS Unit and MSF Access Campaign
attended the hearing. (Interestingly, counsel for the
patentees, Mr. Pravin Anand, objected to our presence,
claiming that this was a closed hearing that was not
open to the public.  He expressed concern that the
Lawyers Collective was adverse to his clients on other
matters, and had taken positions against "innovator"
companies in the press, to the government, and in the
courts.  We replied that there was no provision in the
Patents Act that required such hearings to be closed,
and that it was in the public interest that such
proceedings be open to the public.  We further stated
that we were not parties to the current proceedings,
and the issue of whether anyone was adverse to his
clients on other matters had no bearing on the right
to observe these proceedings.  Ultimately, Mr. Anand
consented to our presence in the proceedings, with his
objection to our presence placed on record.)  What
follows is a brief synopsis of the proceedings,
interspersed with a few clarifications on the Indian
law as and when appropriate.


The patentees' central argument that it was entitled
to be heard during the consideration of Natco's
compulsory licence application was based on the
premise that under both statutory and common law, the
Patent Controller was required to grant the patentees
a hearing before exercising any discretionary action
adverse to their interests.  To buttress its argument
that the Controller was required to do so, the
patentees pointed to provisions in the Patents Act
that required the Patent Controller to grant a "patent
applicant" or any "party to a proceeding" a hearing
prior to exercising any discretionary power adversely.
 They argued that there was no material difference
between "patent applicant" and "patentee," and
therefore these provisions (section 80 and rule 129)
obligated the Controller to grant a hearing before
granting a compulsory licence under section 92A.


It should be noted, however, that the language of
section 92A is mandatory, not discretionary, and the
Controller is required, upon receipt of an application
in the "prescribed manner," to grant a compulsory
licence for export.


The patentees also argued that under fundamental
common-law principles of "natural justice" (similar to
the doctrine of "due process" in other jurisdictions),
an opportunity to be heard was required before any
action adverse to the patentee's interests was taken
by the state.


Finally, the patentees argued that they were a
necessary party to these proceedings, as the
Controller would need access to information in the
patentees' sole possession to determine what amounted
to "adequate remuneration" for the compulsory licence.
 The patentees pointed to a provision in the Patents
Act that required the Controller to look to the
"nature of the invention," "the expenditure incurred
by the patentee in making the invention," and other
factors in determining adequate remuneration for a
compulsory licence.


This section (section 90) expressly limits its
application to compulsory licences granted under a
separate provision (section 84) of the Patents Act -
one in which the patentee's right to be heard is
expressly recognised.


*****


Counsel for Natco, Mr. S Majumdar, responded by
arguing that the history of the Doha Declaration and
the 30 August Decision fully justified the
differential treatment of compulsory licences for
export under section 92A, in which no right of hearing
is expressly provided, with the normal procedures
governing compulsory licences (as provided under
sections 84-92) in which the patentee's right to a
hearing is expressly recognised.  (Even under these
"normal" compulsory licensing provisions however,
expedited measures for granting compulsory licences in
situations of national emergency, situations of
extreme urgency, or for public non-commercial use are
available, and the requirement for providing the
patentee with an opportunity to be heard can be
dispensed with by the Controller in such
circumstances.)


Natco argued that the Doha Declaration expressly
recognised the gravity of public health problems that
developing countries were facing, and sought to
"balance the needs" of both patent holders and
countries facing an urgent need to provide affordable
medicines to its people.  Natco argued that the 30
August Decision, when read with the Doha Declaration,
evinced a policy that "when there is a need [for drugs
produced under compulsory licence], there should be a
rapid response."


In support of its argument that there was no
requirement to give a patentee the opportunity to be
heard prior to the issuance of a compulsory licence,
counsel for Natco pointed to Canada's Access to
Medicines Regime, which similarly does not grant the
right of a hearing to the patent holder during the
application process (section 21.04), but merely gives
the patentee the right to challenge the validity of
the compulsory licence after the fact in a federal
court (section 21.14).  Similarly, Natco argued, the
patentees in India retained the right to challenge the
grant of a compulsory licence in the courts if and
when the compulsory licence was granted.


In response to the patentees' argument that the
Controller could only determine the amount of adequate
remuneration with the assistance of the patentees,
counsel for Natco relied on the WHO/UNDP's
publication, "Remuneration Guidelines for
Non-Voluntary Use of a Patent Medical Technologies"
which laid out several easily calculated methods for
determining adequate remuneration in such
circumstances without the involvement of the
patentees.


Responding to the patentees' assertion that "patent
applicant" and "patentee" were essentially the same,
Natco pointed to the definition of "patentee" in the
Patents Act to show that a "patent applicant" and
"patentee" were distinct entities under the law, and
thus the provisions relating to the use of
discretionary power for patent applicant had no
application to the current proceedings.


Finally, counsel for Natco argued that even the common
law doctrine of natural justice recognised that the
right to be heard was not absolute, and could be
dispensed with in situations that required prompt
action in the public interest.  Counsel for Natco
argued that this was precisely such a situation in
which prompt action was required.  Natco pointed out
that its compulsory licence application was filed in
December 2007, and that the intervention of the
patentees had already delayed the application's
consideration by several months.


*****


On rebuttal, counsel for the patentees distinguished
the comprehensive nature of Canada's legislation from
the spare language contained in section 92A.  He
pointed out the numerous safeguards contained in the
Canadian legislation that ensured that the patentee
would be treated fairly, such as the requirement that
the applicant for the compulsory licence first attempt
to obtain a voluntary licence (which Natco apparently
had not done in this instance); and that the holder of
a compulsory licence provide notifications to the
patentee of the impending export of the product
produced under the compulsory licence.  Counsel for
the patentees argued that no such requirements were
included in the Indian legislation, and in the absence
of such comprehensive safeguards as contained in the
Canadian legislation, the very least that the
Controller could do was to allow the patentee to be
heard during the application process to ensure fair
treatment.


Counsel for patentees further argued that the "notice"
by the Nepal government that Natco was relying upon
was insufficient to amount to a formal notification of
an intent to import drugs produced under a compulsory
licence.  He alleged that Natco, in its application
for a compulsory licence, had merely submitted a
letter from the Nepal government recommending that one
consignment of erlotinib be approved for import from
India during the period 2006-2007.  He argued that
this was insufficient to demonstrate Nepal's intent to
utilise the 30 August mechanism to import drugs
produced under a compulsory licence.  In contrast, he
pointed to the formal notification provided to the WTO
by Rwanda of its intent to utilise the paragraph 6
implementation.


*****


The hearing concluded, and the parties agreed to
submit their written submissions to the Controller
within seven days of the hearing.


We are in the process of attempting to obtain copies
of Natco=92s application and other related papers from
the Patent Office under India=92s Right to Information
Act.  They will be posted on our website
(www.lawyerscollective.org) as and when we obtain
them.