In a remarkable judgment which will have strong implications on the country’s patent system, the Intellectual Property Appellate Board has defended the compulsory license awarded to domestic firm Natco while dismissing the plea of the original patent holder- MNC firm Bayer. The novelty in the issue is that Natco should pay more royalty to Bayer while producing the cancer drug.
In 2012, the Patent Controller of India has awarded compulsory license to Natco for producing the alternatives of Bayer’s kidney cancer drug Nexavar. It was the first compulsory license issued in India under the new TRIPs binding Patent Act of 2005.
Compulsory license is an instrument issued by the patent authority which allows another firm to produce a patented drug on the ground that the original patent holder has either charged exorbitant price or doesn’t supplied enough quantity. In essence, compulsory license takes away the exclusive right of the patent holder (here Bayer) and gives it to some other firm.
Compulsory licensing hence provides protection to the society from monopoly practices of patent holders.
India’s 2005 Patent Act gives wide powers to the patent authority compared to the WTO’s TRIPs instructions with regard to compulsory licensing. Similarly, there are a couple of other clauses in the new Act which gives extra- TRIPs powers to the government in matters related to intellectual property. These clauses are coming under empirical testing as MNC firms are now increasingly challenging them on the ground that such clauses are against the international law set by the TRIPs. So far, the Nexavar issue is going to be the first major one which may bring India’s patent law to the WTO’s Dispute Settlement Mechanism (DSB).
Bayer in immediate future may go to the DSB against the patent laws in the country. In such a situation, the country’s patent system and innovations made under the 2005 Patent Act all will come under severe legal test in accordance with the standards set by the WTO.