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8 Competition L. Int'l 34 (2012)
The Curious Case of Compulsory Licensing in India

handle is hein.journals/cmpetion8 and id is 124 raw text is: THE CURIOUS CASE OF COMPULSORY LICENSING IN INDIA The Curious Case of Compulsory Licensing in India* Naval Satarawala Chopra Amarchand, New Delhi naval.chopra@amarchand.com Tn a move that has alarmed the pharmaceutical .industry, in March 2012 the Indian Patents Office granted its first compulsory licence, for the manufacture and sale of Bayer's patented drug Nexavar, in Natco Pharma Limited v Bayer Corporation (Natco v Bayer).' This article analyses the compulsory licence issued in Natco v Bayer and discusses the possibility of a similar compulsory licence being issued under the provisions of India's competition legislation, the Competition Act, 2002 (Competition Act). In doing so, we debate the scope of a potential refusal-to-license abuse under the Competition Act and outline a possible approach for the Competition Commission of India (CCI) to adopt if it should decide to issue compulsory licences. Intellectual property and competition law: inherent conflict? The relationship between competition law and intellectual property (IP) rights can be best described as a 'tale of uneasy bedfellows'. The application and enforcement of competition law to IP rights is highly topical and hotly debated. The reason for the debate is that while IP laws, such as patent laws, confer exclusive rights, competition law seeks to ensure a competitive market place. The monopoly granted to a holder of an IP right can create barriers to entry and give rise to market power, the abuse of which is prohibited by competition law. As a result, some courts, academics and practitioners see an inherent conflict between these two bodies of law and have traditionally sought to balance the need for incentivising innovation through exclusivity protection with the efficiency benefits of open access competition. This view, however, is overly simplistic and short- sighted. Whilst IP laws grant exclusivity and, in doing Dinoo Muthappa Amarchand, New Delhi dinoo.muthappa@amarchand.com so, may inhibit competition, both IP and competition law share the common aim of encouraging innovation, enhancing consumer welfare and encouraging allocative efficiency. Academic literature on the subject has recognised IP and competition law as being mutually complementary and re-enforcing.2 Moreover, competition law does not seek to prohibit exclusivity per se; it aims to prevent the misuse or abuse of exclusivity in certain circumstances. This is evidenced by the prohibition of exclusivity agreements only where enterprises in a vertical relationship enjoy market power or where exclusivity arrangements are imposed by a dominant enterprise. This is also illustrated in the seminal judgment of Consten & Grundig,3 where the European Court ofJustice (ECJ) distinguished between the existence of an IP right and the improper exercise of the same. Accordingly, IP and competition laws are being viewed as complementary. Natco v Bayer IP laws in India have long made provision for the grant of a compulsory license. However, section 84 of the Patents Act, 1970 (Patents Act), the provision under Indian patent law that provides for the issue of a compulsory licence, was enforced for the first time in Natco v Bayer, in relation to Bayer's patented drug 'sorafenib tosylate'. Bayer sells sorafenib tosylate, which is used for the treatment of the advanced stages of kidney and liver cancer, under the brand name 'Nexavar'. Nexavar is a life-enhancing and not a life-saving drug; it seeks to extend the life of a patient afflicted with the last stages of kidney or liver cancer. Bayer launched Nexavar in 2006 and was granted a patent by the Indian patents authority on 3 March 2008. Bayer then sold the drug to patients in India suffering from the advanced stages COMPETITION LAW INTERNATIONAL August 2012

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