Generation of foreign exchange is not in public interest

The plaintiff, Bayer sued BDR Pharmaceuticals for injunction restraining infringement of Product Patent no.IN225529 and Process Patent no. IN188419 and for other reliefs. Bayer asserted that the patents cover vardenafil, a drug used to treat erectile dysfunction.

Previously, Bayer sued Ajanta for injunction restraining infringement of the same patents. Justice Gauba of the Delhi High Court in the Ajanta Suit held that Bayer did not merit injunctive relief as the patent in question is a non-worked patent, and exports by Ajanta generated employment and tax revenue for the state, and it was therefore in the public interest to allow them to continue.

In the BDR case, a hearing was held on 14 February, and BDR cited Justice Gauba’s order in Ajanta case to argue that an injunction was not merited in its case either. BDR also argued that its exports earn foreign exchange for India and encourage economic activity. Justice Endlaw rejected the Ajanta order’s precedential value being an ad-interim order and ordered the case to be listed in two days. The court also held that if such parameters are to be adopted, then in each case of a non-working of patent, infringement of the patent would be allowed. The court also noted that the drug is also not a life saving drug.

On 16 February, the BDR case was referred to mediation. It is set to be listed again on 8 March.

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.