[Ip-health] SPICY IP blog titled: "The absence of evidence in NATCO's CL application for Nexavr"

Jamie Love james.love at keionline.org
Wed Oct 12 00:09:10 PDT 2011

Prashant Reddy just posted a highly critical comment on the NATCO CL
application on the Spicy IP blog.



Wednesday, October 12, 2011
The absence of evidence in NATCO's CL application for Nexavar

There has been considerable world-wide interest over NATCO’s compulsory
licensing application for Indian patent number 215758 i.e. Bayer’s patent
for Sorafenib, which is marketed under the brand Nexavar. It’s the first
such application post 2005 and is widely seen as the test case. Considering
that the patent belongs to an American company it is likely that this issue
will reverberate at the WTO. We had earlier blogged on this CL, over here
and here. NATCO's CL application is available over here. (Image from here)

Given the attention that this case is getting and its importance to the
generic pharmaceutical industry, one would have expected NATCO to have
approached this application with some degree of seriousness. In my opinion,
the contents of the CL application and the supporting evidence or rather the
lack of it is pretty surprising. Before moving onto the specifics, let me
just provide you with the larger context. Here is a generic pharmaceutical
company attempting to extract intellectual property (worth at least a few
hundred million) of a Fortune 500 company and the only evidence that it
depends upon is 6 or 7 articles which have been printed from the internet!
Seriously?! That’s evidence?!

Let’s not forget the fact that CL proceedings, such as the present
proceedings, are ‘factual’ determinations and the applicant is required to
provide ‘evidence’ establishing the veracity of such facts in a manner
recognized by the law i.e. the Evidence Act, 1872. The burden of proof is on
NATCO, not Bayer because it is NATCO which is seeking a CL.

Moving on to the specifics now:

(i) Inadmissibility of all computer printouts: According to the Indian
Evidence Act, 1872; computer printouts are admissible as evidence only when
the conditions of Section 65B of that Act are fulfilled. This section
basically requires the filing of a rather modest affidavit by a person who
can certify that the computer printout is a genuine reproduction of the
electronic version and has not been manipulated. There is no mention of any
such affidavit in NATCO’s application, as published by the Patent Office.
This would mean that a portion of NATCO’s evidence, which consists of only
computer print-outs, is inadmissible.

(ii) The quality of the documentary evidence cited in the CL application:

(a) The number of Indians suffering from liver and kidney cancers: NATCO
starts of its application by trying to establish the number of people
suffering from liver cancer and renal cancer, since these are the two
cancers that are sought to be treated by Bayer’s Nexavar drug. In order to
establish these statistics NATCO has relied on printouts from the websites
of (i) Mayo Clinic Report, (ii) World Cancer Report (2008), (iii) GLOBOCAN
2008, (iv) Harvard Center for Cancer Prevention: Your Disease Risk: Kidney
Cancer (v) American Foundation for Urological Diseases (vi) Cancer Research
UK. Most of this evidence seems to be inadmissible under Section 60 of the
Evidence Act, 1872. I could be wrong on this point but as per my
understanding if you want to use to some specific academic reports as
evidence it is necessary to have the authors of those reports depose as
expert witnesses. There are of course limited exceptions to the rule. It is
simply not permissible for NATCO’s representative to depose on anything in
those reports when they are not the authors of the report. Moreover, if the
intention was to establish the large number of Indians suffering from these
particular types of cancer, would it not have made sense to get an expert
witness affidavit from the National Cancer Registry Programme that is
administered by the Indian Council of Medical Research? Why cite dated
foreign studies?

(b) The question of ‘limited availability’: The basic grounds for being
granted a CL under S. 84 is the fact that the patented invention is not
being made available to the general public in adequate numbers. In its
application NATCO states that “It is estimated that though the Patentee
sells the product, it reaches less than 1% of patients and almost 99% of
patients who are unable to afford the drug are left to die every year.
According to GLOBOCAN data at least 30,000 patients are diagnosed every year
who suffer from Liver and Kidney cancer. It is estimated that nearly
1,00,000 patients are currently suffering in India on these diseases. Of
these, less than 1% of patients are catered to by the Respondent Bayer. The
remaining 99% of the patients do not receive any medication and thereby fall
victim and die on account of this dreaded disease.” And what is the evidence
cited by NATCO to back up these claims? The answer is ‘nothing’! They’ve not
cited any evidence! The application does not provide any evidence to suggest
that 99% of patients suffering from liver and kidney cancer do not have
access to the drug in question. How then does NATCO hope to convince the
Patent Office that the Bayer’s drug has only limited availability in India?
Also, why in God’s name hasn’t NATCO even referred to the Form 27 i.e. the
‘statement of working’ filed by Bayer for this particular patent. Shamnad
had earlier got out the Form 27 for this particular patent and put it up on
the SpicyIP website. It’s available over here. All that NATCO was required
to do was to ask the Patent Office for a certified copy of the same. Why
haven’t they done it?

(c)Product imported: NATCO is also trying to argue that Bayer’s drug is
imported and not locally manufactured in India and hence liable for
compulsory licencing. To this end, NATCO states “It is learnt that the
Patentee Bayer Corporation imports and sells the drug Sorafenib in India. To
the knowledge of the Applicant, this product is not manufactured in India by
the Respondent”. I mean seriously – how is ‘knowledge’ & ‘learnt’ any
replacement for hard evidence? How difficult was it to get this information
from a Form 27 or the product label?

(d) High price: NATCO also states in its application that Bayer’s drug is
extremely expensive and states the price of the drug. Once again, it does
not cite any evidence to establish this price of the drug. How difficult is
it to file a bill showing the purchase of the drug from an authorized
retailer? NATCO then concludes that it’s a high price and hence
inaccessible. While this conclusion is most likely true, you need to
establish this fact through evidence – an expert economist or doctor who can
depose on the cost of treatment vis-à-vis per capita income. A bald averment
has no evidentiary value unless backed up by an expert opinion or other

(e) Proposed Terms and Conditions: Rule 96 of the Patent Rules, 2003 states
that the CL applicant “shall set out the nature of the applicant’s interest
and terms and conditions of the licence the applicant is willing to accept”.
This basically requires NATCO to inform the Patent Office of the royalty
that it is willing to pay Bayer and also any other terms and conditions.
NATCO’s application is completely devoid of any such ‘terms and conditions’.
How exactly is Bayer going to oppose this application when it doesn’t state

Conclusion: Under the Patent Rules, 2003 the Controller can dismiss this
present CL application on the grounds that it fails to make out a prima
facie case. However that is unlikely to happen for the obvious political
reasons. It’s an absolute pity that NATCO has learnt no lessons from the CL
battles fought by the music industry before the Copyright Board. In that
case both the radio stations and the music companies had led evidence on
pricing and royalties through expert witnesses such as Dr. Bibek Debroy. The
rate of royalties was ultimately fixed on the basis of the evidence led
forth by the expert witnesses. As things stand now, it does not appear to me
that NATCO has any case for a CL. The CL application does not ask for leave
to file any additional evidence and the Patent Rules, 2003 does not allow
for the filing of any additional evidence without the prior permission of
the Controller. Even then, evidence can be filed only to back up the
averments in the application and if there are no averments in the
application (for e.g. proposed royalty rate) there is no question of filing
additional evidence on those points.

Given the political baggage that CL applications come along with, it is
likely that the Controller, on instructions from the Central Govt., will
issue the CL but there is no denying that NATCO’s shoddily drafted CL
application has opened itself to a series of multiple appeals to either the
IPAB or the High Court.
Posted by Prashant Reddy at 10:26 AM

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