Lee Pharma’s Compulsory License Application Rejected


A Compulsory License (CL) application was filed by Lee Pharma with respect to AstraZeneca’s  patent covering the anti-diabetes drug Saxagliptin. The Controller General of Patents issued a notice stating the Applicant’s failure to establish a prima facie case. The Controller General after hearing the Applicant on establishment of a prima facie case has rejected the CL application for failure to establish the grounds for obtaining a CL u/s 84 of the Patents Act.

The following findings emerge from the rejection:

  • On the issue of reasonable requirements of the public being met, the Controller held that currently there are four key gliptins available in the market to treat type 2 diabetes, namely, Linagliptin, Sitagliptin, Saxagliptin and Vidalagliptin. In absence of data/ statistics, there is no way to understand the requirement of saxagliptin in the market or to decide whether its reasonable requirement is being met. The Applicant has therefore failed on this ground.
  • Regarding availability to the public at a reasonably affordable price, the Controller held that the Applicant failed to establish the number of people being denied access due to pricing of the patented drug. The Controller further observed that other drugs in the same category are being sold at similar prices and if the price of said drugs is affordable, it is difficult to fathom how the price of AstraZeneca’s saxagliptin is unaffordable. Further, since the information regarding number/ type of patients in the market is not available, availability and affordability cannot be predicted. The Applicant has therefore not been able to establish that the drug is not available to the public at a reasonably affordable price.
  • On the issue of working of the patented invention in the territory of India the Controller held that manufacturing in India is not a pre-requisite to establish the working of the Patent in India. The need for manufacture in India has to be determined on a case-to-case basis. Since the Applicant has failed to show the exact requirement of saxagliptin or whether it is in short supply, it is very difficult to conclude whether manufacturing in India is necessary or not. Further, the patented drug, inspite of importation, is being made available in the same price range as other DPP-4 inhibitors. Therefore, pricing also does not justify the need to manufacture in India. The Controller further held that the Applicant led no evidence to establish any shortage of supply due to importation alone. The Applicant has therefore failed to establish that the patented invention has not been worked in the territory of India.

PIL on working disclosure requirements

It is given fact that every patentee and licensee is required to file a statement of commercial working of active granted Indian patent under Section 146(2) of the Indian Patents Act for the calendar year on or before March 31 of the next year in the format prescribed by the Act.

The patentee/licensee is required to furnish information pertaining to whether the patented invention has been worked or not worked. In an event the patent is not worked, the patentee/licensee is required to provide reasons for not working and steps being taken for working of the invention. If the patented invention is worked, the quantum and value of the patented product manufactured in India and those imported from other countries needs to be submitted.

The licenses and sub-licensees granted during the year as well as a statement whether public requirement has been met, the degree to which it is met (partly or adequately or to the fullest extent) and the reasonable price at which it is met is also required to be recorded.

Defaulting in meeting with this requirement at the Indian patent office may attract a penalty extending up to rupees ten lakh. Further, any false information on working may lead to a penalty of fine or imprisonment which may extend to six months or both. It is also worth noting that non-working of the patented invention for three years in India is a ground for the grant of compulsory license.

A Public Interest Litigation (PIL) was filed at the Delhi High Court and the same was accepted on 21st August 2015 under Article 226 of Indian Constitution as a writ of mandamus in Shamnad Basheer vs Union of India & Others seeking directions for the Union of India (UOI) to:

  1. Perform their statutory duty to enforce norms relating to disclosure of “commercial working” of patents under Section 146 read with Rule 131 of the Patents Act, 1970 and Rules by every patentee and licensee;
  2. Constitute an expert committee to improve the current format for patent “working” disclosure, as the present format is irrational and grossly insufficient to fulfill the objectives of the Patents Act.

The PIL is based on the survey conducted by the petitioner in April 2011 analyzing some working statements filed by Indian patentees. The survey is stated to reveal that nearly 35% of the patentees failed to disclose their patent working status during 2009 to 2012 and the data so disclosed were highly defective, incomplete, negligent or incomprehensible.

The PIL also alleges that there is massive discrepancies with Patent working disclosure by way of either non-compliance of working requirements or compliance with defects such as:

  1. Refusal to declare
  2. Incomplete information regarding quantum and value
  3. Not providing reasons for not working and steps taken for working by patentee or licensee
  4. Indeterminate quantity of the product
  5. Non-disclosure place of manufacture /importation
  6. Non-compliance by Licensee
  7. Statement on reasonable requirements of the public
  8. Defects in E-filing facility

The PIL prays for the Respondent authorities to be directed:

  1. To strictly enforce compliance with Section 146 with Rule 131of the Patents Act, 1970
  2. To initiate proceedings under Section 122(1) of the Patents Act, 1970 against errant patentees and licensees who have failed to comply with the mandatory requirement of Section 146.
  3. To issue notices under Section 146(1) of the Patents Act, 1970 to patentees and licensees to furnish true and complete information of commercial working of the patent;
  4. To immediately rectify the ‘comprehensive online filing services for patents’ to enable patentees and licensees to submit full and complete working information;
  5. To publish and upload the entire information relating to commercial working of all patents for all years of operation of the patent on their website as per Section 146(3) of the Patents Act, 1970 and Rules thereunder;
  6. To declare that the present format of FORM-27 (the format as prescribed in Schedule II of the Patents Rules, 2003 is insufficient to sub-serve the purpose of the Patents Act, 1970;
  7. To constitute a committee of experts to suggest reforms to improve the public disclosure norms around the commercial working of patents.

The respondent UOI has been provided four week time to file its reply statement. It would be interesting to follow the PIL and the stance taken by the UOI in the matter. Further, one may also be curious to know whether the major patent filers would join the PIL as amicus curiae. In all fairness, appointment of an advisory/committee by the Court seems to be a likely outcome for such a high stake question. The next date of hearing is 17th November 2015.