Posted 29 April 2015
By Michael Mezher
In the midst of arguments before a prominent court in India, generic drug maker Cipla has offered to pay a "reasonable" royalty to Swiss multinational Novartis, The Economic Times reports.
The case will test a number of issues, including how licensing arrangements could work out when a company has already launched a generic version of a patented medicine and India's stance on the controversial practice of compulsory license.
Intellectual Property: Background
Novartis and Cipla have been embroiled in legal disputes since last fall, when Cipla began to sell a generic version of Novartis' chronic obstructive pulmonary disease (COPD) drug, Onbrez.
According to Reuters, Novartis' patents for Onbrez are set to expire in 2020, and the company has partnered with Indian generic manufacturer Lupin Ltd to distribute the drug in India. Additionally, a representative for Novartis told Reuters that "Cipla did not use any of the processes provided for in the Indian legal system to either challenge validity of the patents, establish non-infringement or to seek a license for [Novartis'] patents."
In October, Cipla appealed to the Indian government to revoke Novartis' patents on Onbrez under Section 66, or to issue the company a compulsory license under Section 92(3) of The Patents Act. Sections 66 and 92(3) of The Patents Act act state:
66 — Revocation of patent in public interest — Where the Central Government is of opinion that a patent or the mode in which it is exercised is mischievous to the State or generally prejudicial to the public, it may, after giving the patentee an opportunity to be heard, make a declaration to that effect in the Official Gazette and thereupon the patent shall be deemed to be revoked.
92 — Special provision for compulsory licenses on notifications by Central Government —
(3) Notwithstanding anything contained in sub-section (2), where the Controller is satisfied on consideration of the application referred to in clause (i) of sub-section (1) that [compulsory license] is necessary in—
(i) a circumstance of national emergency; or
(ii) a circumstance of extreme urgency; or
(iii) a case of public non-commercial use
Cipla argued that Novartis was not importing sufficient quantities of the drug to meet the needs of patients in India, where COPD is a major health concern. Some estimates have put the number of people in India affected by COPD between 15 and 30 million.
However, the Indian government did not find merit in Cipla's argument that a compulsory license should be issued under Section 92, The Times of India reported last December.
In the first of two cases heard by the Delhi High Court, Novartis sued Cipla, claiming that the company violated its trademark for Onbrez and created confusion by naming its generic version Unibrez. The court sided with Novartis, and issued an injunction preventing Cipla from selling any medical products bearing the name "Unibrez or any other trade mark as may be deceptively similar [to] Onbrez."
In response to the order, Cipla said it would stop using Unibrez and change the name of its product to Indaflo.
In a second case, Novartis sued Cipla for violating its patents on Onbrez. During the proceedings, Cipla requested that a restraining order that prevented it from selling its stock of Indaflo be lifted, during the interim before court issued its judgement. The court denied Cipla's request, forcing the company to abide by the restraining order until the case comes to a conclusion.
During proceedings in the case earlier today, Cipla offered to pay Novartis a "reasonable" royalty to license its intellectual property to once again manufacture a generic version of Onbrez. According to The Economic Times, Novartis' representatives denied the request, signifying that the case will continue until a judgement is reached.
While the Indian government has so far denied Cipla's request for a compulsory license to produce its generic version of Onbrez, it is possible that the company could be trying to build the case for a compulsory license under Section 84 of The Patents Act, which allows a compulsory license to be granted if "reasonable requirements of the public … have not been satisfied." One measure of reasonable requirements in Section 84 pertains to the "refusal of the patentee to grant license or licenses on reasonable terms."
However, in an analysis of the issue last December, SpicyIP raised this question "whether an attempt to procure voluntary license can be made at this stage – after launch of the generic version."
The Economic Times