PARKE, DAVIS and COMPANY vs. DOCTORS' PHARMACEUTICALS, INC., ET AL., G.R. No.

L-22221 August 31, 1965 Principle in the case: In order that any person may be granted a license under a particular patented invention relating to any of those enumerated under Section 34, it is sufficient that (1) the application be made after the expiration of three years from the date of the grant of the patent and (2) that the Director should find that a case for granting such license has been made out. Facts: Parke Davis & Company, is a foreign corporation is the owner of a patent entitled "Process for the Manufacturing of Antibiotics" (Letters Patent No. 50) The patent relates to a chemical compound represented by a formula commonly called chloramphenicol. The patent contains ten claims, nine of which are process claims, and the other is a product claim to the chemical substance chloramphenicol. Doctors' Pharmaceuticals, Inc., on the other hand, is a domestic corporation which applied for a petition with the Director of Patents, which was later amended, praying that it be granted a compulsory license under Letters Patent No. 50 granted to Parke Davis & Company based on the following grounds: (1) the patented invention relates to medicine and is necessary for public health and safety; (2) Parke Davis & Company is unwilling to grant petitioner a voluntary license under said patent by reason of which the production and manufacture of needed medicine containing chloramphenicol has been unduly restrained to a certain extent that it is becoming a monopoly; (3) the demand for medicine containing chloramphenicol is not being met to an adequate extent and on reasonable prices; and (4) the patented invention is not being worked in the Philippines on a commercial scale. In its petition, Doctors' Pharmaceuticals, Inc. prayed that it be authorized to manufacture, use, and sell its own products containing chloramphenicol as well as choose its own brand or trademark. Parke Davis & Company filed a written opposition setting up the following affirmative defenses: (1) a compulsory license may only be issued to one who will work the patent and doctors pharma does not intend to work it itself but merely to import the patented product; (2) doctors pharma has not requested any license to work the patented invention in the Philippines; (3) doctors pharma is not competent to work the patented invention; (4) to grant doctors pharma the requested license would be against public interest and would only serve its monetary interest; and (5) the patented invention is not necessary for public health and safety. The Director of Patents rendered a decision granting to Doctors Pharma the license prayed for. Issue: WON Doctors Pharma should be given the said compulsory license under sec. 34 (d) of Republic Act No. 165 Ruling: Yes. Rationale: The pertinent statutory provisions that govern the issues raised herein are found in Chapter VIII of Republic Act No. 165, as amended, which for ready reference are hereunder quoted: CHAPTER VIII. Compulsory Licensing SEC. 34. Grounds for compulsory license. Any person may apply to the Director for the grant of a license under a particular patent at any time after the expiration of three years from the date of the grant of the patent, under any of the following circumstances: (a) If the patented invention is not being worked within the Philippines on a commercial scale, although capable of being so worked, without satisfactory reason; (b) If the demand for the patented article in the Philippines is not being met to an adequate extent and on reasonable terms, without satisfactory reason;

(c) If by reason of the refusal of the patentee to grant a license or licenses on reasonable terms, or by reason of the conditions attached by the patentee to licenses or to the purchase, lease or use of the patented article or working of the patented process or machine of production the establishment of any new trade or industry in the Philippines is prevented, or the trade or industry therein is unduly restrained; or (d) If the patented invention relates to food or medicine or is necessary for public health or public safety. A cursory reading of the provisions above-quoted will reveal that any person may apply for the grant of a license under any of the circumstances stated in Section 34 (a), (b), (c) or (d), which are in the disjunctive, showing that any of the circumstances thus enumerated would be sufficient to support the grant, as evidenced by the use of the particle "or" between paragraphs (c) and (d). As may be noted, each of these circumstances stands alone and is independent of the others. And from them we can see that in order that any person may be granted a license under a particular patented invention relating to medicine under Section 34(d), it is sufficient that the application be made after the expiration of three years from the date of the grant of the patent and that the Director should find that a case for granting such license has been made out. Since in the instant case it is admitted by Parke Davis that the chemical substance chloramphenicol is a medicine, while Letters Patent No. 50 covering said substance were granted to Parke Davis & Company on February 9, 1950, and the instant application for license under said patent was only filed in 1960, verily the period that had elapsed then is more than three years, and so the conditions for the grant of the license had been fulfilled. We find, therefore, no error in the decision of the Director of Patents on this aspect of the controversy. Finally, we may add that it is not a valid ground to refuse the license applied for the fact that the patentee is working the invention and as such has the exclusive right to the invention for a term of 17 years (Sections 20 & 21, Republic Act 165) as claimed in the third assignment of error, the reason for it being that the provision permitting the grant of compulsory license is intended not only to give a chance to others to supply the public with the quantity of the patented article but especially to prevent the building up of patent monopolies. The grant of such license may work disadvantage on petitioner but the law must be observed until modified or repealed. On the other hand, there is the advantage that the importation of chloramphenicol might redound to the benefit of the public in general as it will increase the supply of medicines in our country containing chloramphenicol thereby reducing substantially the price of this drug.

ROSARIO C. MAGUAN (formerly ROSARIO C. TAN) vs. THE HONORABLE COURT OF APPEALS and SUSANA LUCHAN G.R. L-45101 November 28, 1986 Principle in the case: A patentee shall have the exclusive right to make, use and sell the patented article or product and the making, using, or selling by any person without the authorization of the patentee constitutes infringement of the patent (Sec. 37, R.A. 165). Any patentee whose rights have been infringed upon may bring an action before the proper CFI now (RTC) and to secure an injunction for the protection of his rights. Facts: Maguan is doing business under the firm name and style of SWAN MANUFACTURING" while Luchan is likewise doing business under the firm name and style of "SUSANA LUCHAN POWDER PUFF MANUFACTURING. Maguan informed Luchan that the powder puffs Luchan is manufacturing and selling to various enterprises particularly those in the cosmetics industry, resemble Identical or substantially Identical powder puffs of which she (Maguan) is a patent holder under Registration Certification Nos. Extension UM-109, Extension UM-110 and Utility Model No. 1184; Maguan explained such production and sale constitute infringement of said patents and therefore its immediate discontinuance is demanded, otherwise it will be compelled to take judicial action. Luchan replied stating that her products are different and countered that Maguans patents are void because the utility models applied for were not new and patentable and the person to whom the patents were issued was not the true and actual author nor were her rights derived from such author. Maguan filed a complaint for damages with injunction and preliminary injunction against Luchan with the then Court of First Instance of Rizal. The trial court issued an Order granting the preliminary injunction prayed for. Consequently, the corresponding writ was subsequently issued. Issue: WON in Maguan has a right to file an action before the CFI for injunction due to infringement of her patent. Ruling: Yes. Rationale: When a patent is sought to be enforced, the questions of invention, novelty or prior use, and each of them, are open to judicial examination. Under the present Patent Law, there is even less reason to doubt that the trial court has jurisdiction to declare the patents in question invalid. A patentee shall have the exclusive right to make, use and sell the patented article or product and the making, using, or selling by any person without the authorization of the patentee constitutes infringement of the patent (Sec. 37, R.A. 165). Any patentee whose rights have been infringed upon may bring an action before the proper CFI now (RTC) and to secure an injunction for the protection of his rights. The burden of proof to substantiate a charge of infringement is with the plaintiff. But where the plaintiff introduces the patent in evidence, and the same is in due form, there is created a prima facie presumption of its correctness and validity. The decision of the Commissioner (now Director) of Patent in granting the patent is presumed to be correct. The burden of going forward with the evidence (burden of evidence) then shifts to the defendant to overcome by competent evidence this legal presumption.

BARRY JOHN PRICE, JOHN WATSON CLITHERON and JOHN BRADSHAW, Assignors to ALLEN & HANBURYS, LTD., vs. UNITED LABORATORIES G.R. No. 82542 September 29, 1988 Facts: Price et. al. are the owners-assignees of Philippine Patent No. 13540 which was granted to them on June 26,1980 for a pharmaceutical compound known as "aminoalkyl furan derivatives." On October 1, 1982, respondent United Laboratories, Inc. (or UNILAB) filed in the Philippine Patent Office a petition Inter Partes Case No. 1683, "United Laboratories, Inc. versus Barry John Price, John Watson CLITHERON and John Bradshaw, assignors to Allen & Hanburys Ltd.') for the issuance of a compulsory license to use the patented compound in its own brands of medicines and pharmaceuticals and to sell, distribute, or otherwise dispose of such medicines or pharmaceutical preparations in the country. The petition further alleged that the patent relates to medicine and that petitioner, which has had long experience in the business of manufacturing and selling pharmaceutical products, possesses the capability to use the subject compound in the manufacture of a useful product or of making dosage formulations containing the said compound.

After the hearing, the Philippine Patent Office rendered a decision on June 2, 1986, granting UNILAB a compulsory license subject to ten (1 0) terms and conditions No. 3 of which provides as follows: 3. By virtue of this license, petitioner shall pay the respondent a royalty on all license products containing the patented substance made and sold by the Petitioner in the amount equivalent to TWO AND ONE HALF (2.5) PER CENT OF THE NET SALES in Philippine currency. The terms 'net sales' means the gross billed for the product pertaining to Letters Patent No. 13540 lessa) Transportation charges or allowances, if any, included in such amount; b) Trade, quantity or cash discounts and broker's or agent's or distributor's commissions, if any, allowed or paid; c) Credits or allowances, if any, given or made on account with reflection or return of the product previously delivered; and d) Any tax, excise or government charge included in such amount, or measured by the production, sale, transportation, use or delivery of the products. The patentees appealed the decision to the Court of Appeals which dismissed the appeal. Price et. al. now questions the validity of the Directors unilateral determination of the terms and conditions of the compulsory license, did not afford the parties an opportunity to negotiate the terms and conditions freely and by themselves. Issue: WON the granting of compulsory license and terms made by the Director are valid. Ruling: Yes. Rationale: The terms and conditions of the compulsory license were fixed by the Director of Patents after a hearing and careful consideration of the evidence of the parties and in default of an agreement between them as to the terms of the license. This he is authorized to do under Section 36 of Republic Act No. 165 which provides:

Sec. 36. GRANT OF LICENSE.If the Director finds that a case for the grant of license under Section 34, hereof made out, he may order the grant of an appropriate license and in default of agreement among the parties as to the terms and conditions of the license he shall fix the terms and conditions of the license in the order. The order of the Director granting a license under this Chapter, when final, shall operate as a deed granting a- license executed by the patentee and the other patties in interest. and under Section 35 of P.D. 1263, amending portions of Republic Act No.165 which reads: Sec. 35. GRANT OF LICENSE.(1)If the Director finds that a case for the grant of a license under Sec. 34 hereof has been made out, he shall within one hundred eighty (180) days from the date the petition was filed, order the grant of an appropriate license. The order shall state the terms and conditions of the license which he himself must fix in default of an agreement on the matter manifested or submitted by the parties during the hearing. Thus, said provision grants to the Director of Patents the use of his sound discretion in fixing the percentage for the royalty rate and We find that the Director of Patents committed no abuse of this discretion. Also, there is always a presumption of regularity in the performance of one's official duties. Moreover, what UNILAB has with the compulsory license is the bare right to use the patented chemical compound in the manufacture of a special product, without any technical assistance from herein respondent-appellant. Besides, the special product to be manufactured by UNILAB will only be used, distributed, and disposed locally. Therefore, the royalty rate of 2.5% is just and reasonable. Furthermore, as pointed out in the respondent's comment on the petition, Identical terms and conditions had been prescribed for the grant of compulsory license in a good number of patent cases. Of indubitable relevance to this point is the evidence that UNILAB has been engaged in the business of manufacturing drugs and pharmaceutical products for the past thirty (30) years, that it is the leading drug manufacturer in the country, that it has the necessary equipment and technological expertise for the development of solid dosage forms or for tablet, capsule, and liquid preparations, and that it maintains standards and procedures to ensure the quality of its products. Even if it were true, as alleged by the patentee (although it is denied by UNILAB), that its capability to use the patented compound was only acquired after the petition for compulsory licensing had been filed, the important thing is that such capability was proven to exist during the hearing of the petition. The patented invention in this case relates to medicine and is necessary for public health as it can be used as component in the manufacture of anti-ulcer medicine. The Director of Patents did not err in granting a compulsory license over the entire patented invention for there is no law requiring that the license be limited to a specific embodiment of the invention, or, to a particular claim. The invention in this case relates to new aminoalkyl derivatives which have histamine H 2 blocking activity, having the general formula (I) and physiologically acceptable salts, Noxides and dehydrates thereof. The compound ranitidine hydrochloride named in Claim 45 is also covered by General Claim I and several other sub-generic claims. Therefore, a license for Claim 45 alone would not be fully comprehensive. In any event, since the petitioner will be paid royalties on the sales of any products the licensee may manufacture using any or all of the patented compounds, the petitioner cannot complain of a deprivation of property rights without just compensation.