Compulsory license makes it compulsory for the owner of a patent to license the use of their rights against payment either set by law or determined by arbitration. A company seeking to use a patent can do so without seeking the patent holder’s consent, and pays the patent holder a set fee for the license when a compulsory license is granted for the company.

Background of the case

In the present case there is a drug named Nexavar which was patented by Bayer HealthCare AG’s in India in 2008. Nexavar was developed by Bayer HealthCare AG with Onyx Pharmaceuticals, a California biotechnology company and it is used to treat advanced kidney cancer and liver cancer and has been to extend lives by a median of about three months. In March 2012 the Controller General of India P.H. Kurian issued the first ever compulsory license against Bayer HealthCare AG in India for their cancer drug ‘Nexavar’. In that decision it was stated that Natco pharmaceuticals will be allowed to manufacture generic version of the drug Nexavar(i.e. Sorafenib tosylate). This decision was made under Section-84 of Indian Patent Law, 1970.


The Controller general of India P.H. Kurian issued a compulsory license to Bayer HealthCare AG in which Natco pharmaceuticals was allowed to manufacture the generic version of the drug and had to pay 6% in royalties to Bayer HealthCare AG. Natco pharmaceuticals was also asked to provide free medication to 600 people every year until compulsory license is granted(till 2021).


Bayer HealthCare AG opposed the decision and filed a complaint against the decision in IPAB stating that the order of the Patent Controller of India damages the international patent system and endangers pharmaceutical research.Bayer also stated that “The limited period of marketing exclusivity make it possible for patentee to ensures that the costs associated with the research and development of innovative medicines can be recovered, and to facilitate access for patients to innovative treatments, Bayer has had a patient access programme in place since the launch of Nexavar in India in 2008,”.Another spokesman from India stated that “We will rigorously continue to defend our intellectual property rights, which are a prerequisite for bringing innovative medicines to patients,”.

Hearing concluded

The hearing of the case between Bayer Healthcare AG and Natco pharmaceutical concluded on 4thSeptember, 2012 after two hearings on 3rd and 4th September, 2012 in IPAB in IPO, Chennai. Both the parties made their arguments in IPAB against a panel of two members of IPAB {Justice PrabhaSridevan, and DPS Parmar, Technical Member (Patents)}. The panel has reserved the decision and no date have been decided yet for the final judgment.

However, the international humanitarian health organization Médecins Sans Frontières (MSF) have criticised the decision of Bayer Healthcare AG stating that they are looking for profits above health needs of people.

“It is not the use of a compulsory license that should be challenged, but the continued pursuit of excessively high profits over public health needs,” Leena Menghaney, campaign manager in India for MSF’s Access Campaign said.