Examination of Pharmaceutical Patent Applications by ANVISA in Brazil

The publication in April 2013 of Brazil Resolution RDC 21/2013 resulted in the implementation of a new workflow in the Brazilian Patent and Trademark Office (INPI). Specifically, patent applications claiming pharmaceutical products or processes pending as of December 15, 1999, or filed after this date, are forwarded, after a request for examination is filed, from INPI directly to the National Agency of Sanitary Surveillance (ANVISA) for examination based on public health issues. Such examination is conducted by Examiners in ANVISA’s Intellectual Property Division. As a result of its examination, ANVISA determines whether or not an application contradicts public health and issues a grant or denial of “prior consent” to the application. Patent applications for which “prior consent” is granted are returned to INPI for further processing and/or examination, whichever is appropriate.

ANVISA will deny “prior consent” for any patent applications considered to be contrary to public health. A patent application is considered to be contrary to public health when the pharmaceutical product or process disclosed in the patent application (1) presents a health risk (namely, the application claims a substance the use of which use has been prohibited in Brazil); or (2) is directed to a pharmaceutical product or process that is of interest to the policies of medicines or pharmaceutical care in the Brazilian Universal Healthcare System (SUS) and does not comply with the patentability requirements under Brazilian Law #9.279/96 (such as novelty, inventive step, enablement, clarity of the claims, etc.). If a pharmaceutical product comprises or a pharmaceutical process results in a substance the use of which is prohibited in Brazil, then the application will be deemed to present a health risk.

Patent applications directed to pharmaceutical product or processes are considered to be of interest to the policies of medicines or pharmaceutical care of the SUS when they comprise or result in a substance that (1) is listed in the Ordinances of the Brazilian Ministry of Heath or any updates thereof that define a strategic product of the SUS; and (2) belongs to a therapeutic categories listed in Ordinance 1284/2010 or any updates thereof. The therapeutic categories listed in Ordinance 1284/2010 are provided below:

Section 1: Antiviral / antiretroviral

Section 2: Neglected Diseases

–          Malaria

–          Chagas disease

–          Leishmaniasis

–          Tuberculosis

Section 3:  Non-transmissible chronic diseases

–          Alzheimers

–          Antiasthmatic

–          Antiparkinsonian

–          Antipsychotics / anticonvulsants

–          Antirheumatic / anti-inflammatory

–          Immunosuppressants

–          Osteoporosis

–          Pulmonary arterial hypertension

–          Others

Section 4:  Products obtained through Biologic pathways

–          Monoclonal antibodies

–          Enzymes

–          Hormones

–          Proteins

Section 5:  Vaccines and Hemoderivatives

Section 6: Drugs for Treating Accidents and Incidents related to nuclear accidences

An Applicant receiving a written opinion from ANVISA (either an unfavorable opinion denying prior consent or an Office Action) has ninety days from receipt to submit a reply. If an Applicant chooses not to submit a reply, ANVISA will deny prior consent for the application. All written opinions reporting the conclusion of ANVISA’s analysis regarding prior consent (both granting and denial) are published in the Brazilian Official Gazette.

If prior consent of an application is denied, an Applicant can file an administrative appeal to the Collegiate Board of ANVISA within sixty days of receipt of the opinion. In the event the appeal is unsuccessful, the denial of prior consent will be ratified by ANVISA. After ratification of the denial, the application will be sent back to INPI. At this point, INPI will essentially “shelve” the application for an unknown period of time. Presently, no patent application for which prior consent has been denied has been shelved by INPI.

Several Brazilian patent attorneys have expressed their opinion that they believe the “shelving” of a patent application without any examination by INPI is illegal and perhaps even unconstitutional. Their argument is that by paying an examination fee to INPI, an Applicant has the right to have its application examined by INPI (which is specifically authorized under the Brazilian constitution to review patent applications).

In the event an application is “shelved” by INPI, an Applicant can file an administrative appeal. The prosecution and judgment of administrative appeals within INPI is handled by its President, as represented by a Board of Examiners. If the appeal is rejected, the only remaining option available to an Applicant is to file a lawsuit in a Brazilian Federal Court against ANVISA’s intervention in the substantive examination of the pharmaceutical patent application and INPI’s refusal to examine the application.

Approximately eighteen lawsuits have been filed against ANVISA in connection with its denial of prior consent under the previous workflow (where applications were first examined by INPI and then sent to ANVISA for examination based on public health issues). In a majority of these lawsuits, the court has reversed ANVISA’s denial of prior consent. In these cases, the court has held that ANVISA must restrict its review of an Applicant’s patent application to truly health issues, meaning that if INPI approved a patent application directed to a pharmaceutical product or process then a patent should be granted.

On May 13, 2013, ANVISA published an internal Orientation Guide detailing how pharmaceutical product and process patent applications are screened by its Examiners. According to the Orientation Guide, a patent application falling within any of the therapeutic categories in Ordinance 1284/2010 will be subject to substantive examination on the merits by an ANVISA patent Examiner. Interestingly, the Orientation Guide clarifies that ANVISA intends to review the patentability of any pharmaceutical patent application deemed to be strategic to the interests of SUS. In fact, for patent applications where ANVISA has denied prior consent, such applications have been considered to be strategic to the interests of SUS as falling under the therapeutic categories in Ordinance 1284/2010. Generally, in instances where ANVISA has denied prior consent, such unfavorable decisions have found the claims to lack novelty and/or inventive step.

The Brazilian Official Gazette published on May 24, 2013, reported that ANVISA had granted prior consent in sixty six patent applications. Of these applications, thirty eight were analyzed without any prior formal examination by INPI. Fifty six of these applications were granted prior consent because ANVISA determined that these applications did not present a health risk or were not of interest under SUS’s policies. For the remaining ten applications, ANVISA granted prior consent for the applications even though the applications were deemed to be of interest under SUS’s policies. Additionally, these applications were found to comply with the patentability requirements under Brazilian patent law. It will be interesting in future editions of the Brazilian Official Gazette to see the types of applications for which ANVISA denies prior consent. Please watch the BRIC Wall for future posts on ANVISA’s granting and denial of prior consent for patent applications.

Thanks to the Dannemann Siemsen firm for providing their assistance in reviewing this post and providing their insights to the BRIC Wall regarding ANVISA’s granting of prior consent under the new workflow in Brazil.

Understanding Chinese Inventor Reward and Remuneration

By: Lisa L. Mueller

Employee compensation or remuneration for inventions developed and patented during course of their employment is a complicated and often expensive issue faced by multinational companies having research and development facilities in multiple countries throughout the world.  With more and more companies choosing to conduct research and development directly in China, it is important for companies to understand China’s inventor remuneration law.  Specifically, in China, the statutory basis for inventor reward and remuneration is found in Article 16 of Chinese Patent Law.  More particularly, Article 16 states that:

“The entity that is granted a patent right shall award to the inventor or creator of a service invention–creation a reward and, upon exploitation of the patented invention-creation, shall pay the inventor or creator a reasonable remuneration based on the extent of spreading and application and the economic benefits yielded.”

According to the revised Implementation Rules of the Chinese Patent Law (Rules) which came into effect on February 1, 2010, the statutory remuneration scheme provided in Article 16 applies to all business entities that own a Chinese patent (such as an invention patent, an utility model patent, or a design patent) regardless of the nationalities of the inventors.

For any company doing business in China, Article 16 raises the basic question as to what constitutes “reasonable remuneration”?  Some guidance can be found in Rules 76-78.  Specifically, Rule 76 provides that a company that owns a Chinese patent can specify the amount of remuneration and manner in which remuneration is awarded:

1.  By contract with the employee-inventor; or

2.  By specifying in its corporate by-laws or corporate policy documents its employee-inventor remuneration policy.

In the absence of any contract or corporate policy regarding employee-inventor remuneration, Rules 77 and 78 provide a two-stage remuneration scheme:

1.  Upon issuance of a patent, the employee-inventor should be awarded no less than 3000 RMB for an invention patent or no less than 1000 RMB for a utility model patent or design patent which is to be paid no later than three months after grant of the patent; and

2.  Once the invention is commercially exploited, the employee-inventor should be awarded no less than:

a.   2% of the annual profits resulting from such exploitation of the invention patent or utility model patent; or

b.  0.2% of the annual profits from exploitation of a design patent.

Alternatively, in lieu of the above payments, an employer can choose to make a one-time lump sum payment to the employee-inventor based on the above rates.  Additionally, if a company licenses s patent to a third party, the employee-inventor is entitled to no less than 10% of the licensing revenue.  Furthermore, employee-inventor remuneration must only be paid during the period of time that the patent is valid.  If the patent is found to be invalid, then the employer is relieved of its obligation to make any further remuneration payments to the employee-inventor.

Generally, it is preferred that an employer and employee-inventor execute a contract that specifically deals with inventor reward and remuneration.  In terms of the compensation to be paid to the employee-inventor under such contracts, compensation may be paid in any form, such as cash, shares, equity or any other form that might be agreed upon by the parties.  One interesting question that arises in this context is what happens if a contract between an employer and employee-inventor provides for a payment of 0.1% of the annual profits for an invention patent or a utility model patent.  Is such compensation “reasonable” under Article 16 despite the fact that statute provides for a minimum payment of 2% of the annual profits in the absence of an agreement?  While currently there is no case law that has specifically addressed this issue, several judges from the high court/supreme court have stated unofficially that a contract between the parties agreeing to such payment will be upheld and enforced unless the contract is invalid for one of the reasons pursuant to Articles 52-53 of the People’s Republic of China (PRC) contract law or rescinded for one of the reasons pursuant to Article 54 of PRC contract law.

Another interesting, yet unresolved question, relates to who is responsible for remuneration payments once a patent is assigned from the original employer to a third party or even from a parent company to one of its subsidiaries.  Is the original employer liable for such payments or the new assignee? Or should the original employer be held to be jointly and severally liable?

While no official statistics are available as to the number of inventor remuneration law suits that have been filed in China, there are approximately 100 such suits filed annually.

Thanks to the CCPIT Patent and Trademark Law Office for providing their insights to the BRIC Wall on China’s Inventor reward and remuneration scheme.


Establishment of Russia’s Specialized Intellectual Property Court

By: Lisa Mueller

In December 2011, Russia implemented legislative changes establishing a specialized intellectual property (IP) Court. The purpose of the IP Court is to ensure the proper adjudication of IP disputes which are notorious for their complexity. Although the IP Court was officially formed in February 2013, it has not yet begun hearing cases. On May 15, 2013, during the St. Petersburg International Legal Forum, Presiding Judge Ludmila Novoselova stated that she expects the IP Court to start hearing cases in approximately July 2013, although further delays are possible. Some of the reasons for the delay are: (1) infrastructure remains to be built; (2) professional and administrative staff positions remain vacant; and (3) proposed new legislative initiatives could expand the jurisdiction of the IP Court.

With respect to the proposed new legislative initiatives, these initiatives relate to whether the jurisdiction of the IP Court should be expanded in include trademark non-use cancellation actions. Presently, these actions fall within jurisdiction of the Arbitration Court of Moscow; however, technically, these cases are to be transferred to the IP Court once it begins hearing cases. Nonetheless, in April 2013, a bill was introduced to exclude non-use cancellation actions from the jurisdiction of the IP Court and to instead provide jurisdiction for these cases in the arbitration courts (based on the location of the defendant). The bill was introduced by Mr. Pavel Krasheninnikov, the chairman of the State Duma’s (lower house of the Russian Parliament) committee on civil, criminal, arbitration and procedural legislation. It is quite possible that the opening of the IP Court may be further delayed until this issue is resolved.

Jurisdiction of the IP Court

The IP Court has a dual role in the Russian court system acting as a first instance and second appeal (cassation) court. The IP Court will operate as a first instance court, hearing appeals of decisions of the Russian Patent Office, including its revocation tribunal, the Chamber for Patent Disputes. The decisions of the IP Court can be appealed to the Presidium of the IP Court. The IP court will also operate as a second appeal (cassation) court for IP infringement actions. Figure 1 outlines the types of cases that will fall within the jurisdiction of the IP Court. Figure 2 outlines the role the IP Court will play in IP infringement actions.

Figure 1

Types of cases that will fall within the jurisdiction of the IP Court

Types of cases that will fall within the jurisdiction of the IP Court

Figure 2

IP Court role in IP infringement actions

IP Court role in IP infringement actions


All cases in the IP Court will be heard by a panel of at least three judges. The decisions of the Presidium of the IP Court with respect to appeals against Patent Office decisions, and in IP infringement cases, can be appealed to the Supreme Arbitration Court. Figure 3 depicts the four-level (Levels I-Level IV) system for IP disputes.

Figure 3

This chart depicts the four-level (Levels I-Level IV) system for IP disputes

This chart depicts the four-level (Levels I-Level IV) system for IP disputes

Transition period

Currently, appeals against Patent Office decisions are filed at the Arbitration Court of Moscow. These decisions can be appealed to the first (appellate) appeal court 9th Arbitration Appellate Court and then to the second (cassation) appeal court Federal Arbitration Court of the Moscow Circuit.

Once the IP Court begins hearing the cases, any pending appeals filed at the Arbitration Court of Moscow will remain in that court. However, any second (cassation) appeals may not be filed at the Federal Arbitration Court of the Moscow Circuit, but must instead be filed at the Presidium of the IP Court.

As mentioned above, the IP Court is expected to start hearing cases in July, at the earliest. Once the IP Court starts to hear cases, it is important to consider the implications of the “transition period.” The implications of the transition period with regard to challenging Patent Office decisions (for example, patent revocations) could unfold as follows:

  1. The Patent Office issues a decision to revoke a patent;
  2. Patentee appeals the decision to the Arbitration Court of Moscow as the first instance court (the case stays in this court even after the IP Court begins hearing cases);
  3. The Arbitration Court of Moscow renders a decision upholding or reversing the Patent Office Decision;
  4. The decision of the Arbitration Court of Moscow is appealed to the 9th Arbitration Appellate Court as the first appeal court;
  5. The 9th Arbitration Appellate Court renders its decision; and
  6. If, by the time of filing of the second (cassation) appeal the IP Court begins hearing cases, then the second appeal must be filed at the Presidium of the Supreme Court instead of the Federal Arbitration Court of the Moscow Circuit as is currently the case.


The IP Court is presided over by Ludmila A. Novoselova, an ex-judge of the Supreme Arbitration Court. Ms. Novoselova was an unexpected choice, as she is a corporate law specialist. A minimum number of 15 judges is required for the IP Court to operate. At the time of this post and according to the official website of the IP Court (http://ipc.arbitr.ru), 13 judges have been appointed. Most of the IP Court judges are former judges of the arbitration courts. Only two judges have technical backgrounds such as in physics (Judge Rogozhin) and mechanics (Judge Vasilieva). Specific details on the judges are provided below.

Judges of the Intellectual Property Court


The IP Court is located in downtown Moscow (Mashkova St., 13), close to the Supreme Arbitration Court.

Please watch the BRIC Wall for future posts on the status of Russia’s specialized IP Court.

The above is from an original article prepared by Gowlings and edited by Lisa Mueller.  Many thanks to Gowlings for providing their insights on Russia’s specialized IP Court.

Organizational Structure & the Working of the Indian Patent Office

We are very pleased to have a guest post by the law firm of Chadha & Chadha on the organization structure and inner workings of the Indian Patent Office.

The patent system in India is administered under the direction of the Controller General of Patents, Designs, Trademarks and Geographical Indications (CGPDTM), appointed under sub-section (1) of Section 3 of the Trade Marks Act, 1999.  The Office of the Controller General of Patents, Designs and Trade Marks functions under the Department of Industrial Policy and Promotion, Ministry of Commerce and Industry. Mr. Shri Chaitanya Prasad is the current CGPDTM of the Indian Patent Office (IPO).

The CGPDTM administers the Patents Act and Rules, along with the Designs Act, the Trade Marks Act and Geographical Indications (which was just quite recently brought under his purview). In addition, he supervises each of the 11 branch offices, which includes the 5 branch offices of the Trademarks Registry, the 4 branch offices of Patents and Designs (Design functions are only performed at the Kolkata branch), the office of the Registry for Geographical Indications and the National Institute of Intellectual Property Management (NIIPM) and the Patent Information System (PIS).  Each of these offices report directly to the CGPDTM through their branch heads. Thus, each branch office works as an independent unit under the supervision of the Controller General.

There are four Patent Offices in India, which are located in Kolkata (Main Office), Mumbai, Chennai and Delhi. The Office of the CGPDTM is located in Mumbai.

Moving in the descending order, the CGPDTM further delegates his powers to Senior Joint Controller of Patents & Designs, Joint Controllers of Patents & Designs, Deputy Controllers of Patents & Designs and Assistant Controllers of Patents & Designs (who are involved with various procedures necessary for patent grant).

Org Chart

Hierarchy of Officers in Patent Office Graph

The Department of Industrial Policy & Promotion (DIPP) has initiated a one year training program for newly recruited Examiners of Patents & Designs.  These new Examiners will undergo three months of institutional training at NIIPM in Nagpur followed by eight months of on the job training at the various patent offices. Thereafter, they will undergo advanced training for a period of one month on Patent Law & Examination methodology at NIIPM in Nagpur.

During 2009-10, the Patent Office Procedure (POP) was published clearly demarcating the functions and responsibilities of various sections of the IPO in order to ensure an orderly and timely progression of patent applications towards grant.

A crucial step introduced in the POP to ensure the quality, uniformity and consistency in the  examination and grant of patents was the formation of four groups of Examiners and Controllers having broad specialization in a variety of subject matter areas. Group 1 encompasses Chemistry and allied subjects, Group 2 encompasses Biotechnology and Microbiology, Group 3 encompasses Mechanical and allied subjects, and Group 4 encompasses Electrical, Electronics and allied subjects. These groups work under the overall supervision of the Group Leaders who have responsibility for the overall functioning of the section.

The Group Leaders hold meetings with the group members, discuss the content of each application and allocate applications to the Controllers. The Examiners to whom the files will be assigned is also decided during this meeting. The decision of which files are assigned to which Examiners is determined based on the Examiner’s experience and subject matter expertise.

After allocation of the applications, the Controller assigns the application to the appropriate Examiner and requires him or her to prepare a report to the Controller within a period of one month from the date on which the application is assigned. The allotment of patent applications in this manner rationalizes the functioning in a more professional and transparent manner.


This scientific approach undertaken by the IPO ensures rationalization in the allotment of patent applications and improves the quality of examination. Also, in order to facilitate timely grant of patents, steps have been taken and successfully implemented for the digitization of applications and secure online filing procedures, thereby considerably reducing the time involved in filing patent applications.

Understanding Compulsory Licenses in India – Part 2 of a 2-Part Series

Section 92

Under Section 92 of the Act, compulsory licenses can be granted on notification by Central Government:

1.  In a case of a national emergency (including a public health crisis), extreme urgency or in the event of public non-commercial use; (Section 92(1)); or

2.  For export (Section 92A(1)).

Emergency: With respect to compulsory licenses granted as a result of national emergency, extreme urgency or as a result of public non-commercial use, such licenses are published by Central Government in the official gazette.  Once these licenses are published, the Controller will grant a compulsory license to any interested person who applies for such a license.  The granting of compulsory licenses under section 92(1) cannot be challenged by the patentee either through an opposition proceeding or in court. However, the Controller is required to notify the patentee of the granting of the compulsory license under this section.

Export: With respect to compulsory licenses granted for export, such licenses may be granted for the manufacture and export of patented pharmaceutical products to any country having insufficient or no manufacturing capacity in the pharmaceutical area relevant to the patented pharmaceutical product in order to address “public health problems”.  Compulsory licenses will only be granted under Section 92A(1) if the country experiencing the “public health problems” has already granted a compulsory license for the patented pharmaceutical product at issue or if the Government of that country has provided notice in the country’s Official Gazette, with respect to the pharmaceutical patented product to be imported from India.  In these instances, the Controller will grant a compulsory license to an applicant on certain terms and conditions (which will be published) and only for manufacture and export of the patented pharmaceutical product to the country in question.  The Controller will also determine the compensation to be paid to the patentee.

License Revision and Termination

Twelve (12) months after the licensee has worked the invention on a commercial scale, the licensee of a compulsory license may make an application to revise the terms and conditions of the license on the ground that the terms and conditions settled upon have proven to be more onerous than originally expected and as a consequence thereof, the licensee is unable to work the invention except at a loss.  The application must include facts and evidence to support the application as well as the remedy or relief sought by the license holder.  The license holder may request a hearing.  The Controller will review the application and after the hearing, will grant or deny the application.  If the application is granted, the Controller will revise the terms and conditions of the compulsory license. However, such an application for revision of a compulsory license shall not be entertained more than once.  Given that Bayer received a 1% increase in the royalty rate by IPAB, it will be interesting to see if after one year Natco will attempt to have the royalty rate reduced back to 6%.

A compulsory license can be terminated if the circumstances under which the license was granted no longer exist and are not likely to recur.  The patentee (or another party in interest) may filed an application in the Indian Patent Office with supporting evidence requesting that the compulsory license be terminated.  The compulsory license holder will be provided with a copy of the application and has a period of one (1) month from the date of receipt of the application to object to the application.  If the license holder objects to the application, he/she must notify the patentee (or other interested party) and the Controller of his/her objection.  After receipt of such an objection, the Controller will hold a hearing and decide the application based on the facts and evidence submitted by the parties.  If the Controller decides to terminate the compulsory license, he shall issue an order providing the terms and conditions of such termination and serve copies of the order on both the licensee and compulsory license holder.

Compulsory Licenses in India

As mentioned above, the IPAB upheld the compulsory license to Nexavar® on March 4, 2013, which was originally granted by the Controller in March 2012.  Since 2012, compulsory licenses have been granted or are in process of being granted for several pharmaceutical products as shown by below:




When Issued



Hepatocellular carcinoma

March 2012 – Decision upheld March 2013 (Article 84)



Breast cancer

In process by the Department of Industry Property and Promotion (DIPP) (Article 92)



Breast cancer

In process by the DIPP (Article 92)




In process by the DIPP (Article 92)

Compulsory licenses issued in other countries

India is not the only country that has issued compulsory licenses for patented pharmaceutical products.  While the compulsory license laws vary country-by-country, as shown in the below table, compulsory licenses have been issued by several countries for a number of different pharmaceutical products:






Lamivudine, Nevirapine






Generic HIV and AIDS medicines


Lamivudine, Nevirapine


Hepatitis B vaccine


Imipenem/cilastatine, Sumatripan succinate


Didlanosine, Zidovudine


Lamivudine, Stavudine, Nevirapine


Lopinavir/Ritonavir, Clopidrogel, Erlotinib, Letrozole, Docetaxel


Lamivudine, Stavudine, Nevirapine

The issue of compulsory licenses in India is something that every company should be concerned about when procuring patents and conducting business in India.  While most of the recent attention has centered on compulsory licenses for patented pharmaceutical products, it is important to remember that India’s Patent Act provides for broad compulsory license provisions that are not limited to just pharmaceutical products but encompass products from any technology.

To read Part 1 on this blog topic, click here.

Thanks to the Chadha & Chadha firm for providing their insights to the BRIC Wall on compulsory licensing.

Understanding Compulsory Licenses in India – Part 1 of a 2-Part Series

On March 4, 2013, India’s Intellectual Property Appellate Board (IPAB) upheld the country’s first compulsory license to a pharmaceutical product.  Specifically, the decision upheld a compulsory license issued to Natco Pharma Ltd., an Indian generic drug manufacturer, to sell Bayer’s patented chemotherapy drug Nexavar® (sorafenib tosylate).  Given the economic consequences of this compulsory license, Bayer is expected to further appeal this decision.  It is important for companies procuring patents and doing business in India in all industries to understand the country’s compulsory licensing laws.

A compulsory license is a statutorily created license that allows certain parties to use or manufacture a product encompassed by the claims of a patent without the permission of the patent owner (patentee) in exchange for a specified royalty.  The Indian Patent Act (Act) contains very broad compulsory licensing provisions.  The two provisions of the Act that allow for compulsory licenses are Sections 84 and 92.

Section 84

Under Section 84, the Controller of Patents can issue a compulsory license three (3) years after the issuance of a patent if one of the following conditions is met:

1.  The reasonable requirements of the public with respect to the patented invention have not been satisfied; or

2.  The patented invention is not available to the public at a reasonable price; or

3.  The patented invention is not worked in India.

Public Accommodation: The Act contains a list of circumstances in which the “reasonable requirements of the public” will be considered not met.  These are:

1.  The patentee does not grant a license on “reasonable terms” thereby causing: (a) a disadvantage to a trade or industry or the development or establishment of an industry in India; (b) demand for the patented product not to be sufficiently met or available on reasonable terms; (c) insufficient supply or development of a market in India for the exportation of the patented article; or (d) a disadvantage in the establishment or development of commercial activities in India.

2.  The patentee imposes conditions with respect to the grant of license, sale or use of a patented product or process, the manufacture, use or sale of non-patented materials or the establishment or development of any trade or industry in India, which is prejudiced.

3.  The patentee includes one or more of the following conditions in a license:  (a) an exclusive grant-back clause for any improvements developed by the licensee on the patented product or process; (b) a clause prohibiting the licensee from challenging the validity of the licensed patent(s); or (c) a clause that is essentially a “coercive” package license (namely, requires the licensee to purchase non-patented items from the patentee as a condition of the license).

4.  The patentee does not work the patented invention in India to the fullest extent possible or on a commercial scale to an adequate extent.

5.  The working of the patented invention on a commercial scale in India is being prevented or hindered as a result of the importation of the patented invention by:  (a) the patentee or a person authorized by him; (b) persons purchasing from the patentee, either directly or indirectly; or (c) the infringement of the patent by a third party against whom the patentee is not taking or has not taken any action to eliminate said infringement.

Reasonable Price: With respect to the patented invention not being available to the public at a reasonable price, a compulsory license will be granted if a patented invention is not being made available to the public at an affordable price.  For example, Bayer was selling Nexavar® for about Rupees 280,000 (around US $5,160) per month compared to Natco selling the drug for about Rupees 8,800 (around US $162) per month.

Worked in India: With respect to a patented invention being worked in India, a compulsory license will be granted if the patented invention is not worked in India.  An invention is considered to be “commercially worked” in India if the patented invention is: (a) manufactured in India; (b) imported into India; (c) licensed and forms a part of a product that is sold in India; or (d) commercialized in India in any other manner.

Interested Person: Any person interested may file an application for a compulsory license in the Indian Patent Office three (3) years after the grant date of a patent.  A “person interested” is interpreted broadly under the Act and includes a licensee of patent for which a compulsory license is sought.  The application must include the nature of the interest of the party filing for the license, the facts supporting the application and license conditions (royalty rates, etc.) the applicant is willing to accept.

Controller Review: The Controller will review the application and if satisfied that a prima facie case has been made will direct the applicant met the requirements to grant the license, will send a copy of the application to the patentee or any other person having an interest in the patent.  The application for the compulsory license will be published in the official journal of patents.

Within two (2) months of publication in the official journal, the patentee (or any other person) may file a notice of opposition opposing the application.  The notice of opposition must state the grounds of the opposition, the terms and conditions of a license that would be acceptable to the opponent and any evidence necessary to support the opposition.  A copy of the notice of opposition is provided to the applicant for the compulsory license.  A hearing is conducted during which both parties will have the right to be heard.  After each party is heard, the Controller will make his/her decision on the compulsory license.

If after the Controller’s review of the application he/she is not satisfied that a prima facie case has been made, he/she will notify the applicant.  The applicant may then request a hearing within one (1) month from the date of such notification.  If the applicant does not request a hearing, the application for a compulsory license will be refused.  If the applicant files a request for a hearing, a hearing will be conducted and after hearing, the Controller will make a decision on whether or not to allow or refuse the compulsory license.  If the Controller decides to allow the compulsory license, the patentee or other person having an interest in the patent will be notified and the procedure described above will be followed.

After deciding to grant a compulsory license, the Controller will determine the terms and conditions of the license.  For example, in the case involving Nexavar®, a non-exclusive, non-assignable license was given Natco.  In addition, the Controller initially awarded Bayer a royalty of 6% for sales of Nexavar® by Natco.  The IPAB increased this royalty to 7%.

To read Part 2 of this blog, click here.

Thanks to the Chadha & Chadha firm for providing their insights to the BRIC Wall on compulsory licensing.