Price vs United Laboratories

PRICE vs UNITED LABORATORIES G.R. No. 82542 September 29, 1988 FACTS Petitioners are the owners-assignees of a Phil Patent s ince 1980 for a pharmaceutical compound known as "aminoalkyl furan derivatives." In 1982, UNILAB filed in PPO a petition for the iss uance of a compulsory license to use the patented compound in its medicines, and to sell, distribute, or otherwise dispose of such medicines in the country (UniLab vs. Barry John Price, John Watson CLITHERON and John Bradshaw, assignors to Allen & Hanburys Ltd.) PPO, in 1986, granted UNILAB a compulsory license with 10 terms and conditions, including (No. 3) the payment by UNILAB of a royalty of 2.5% on net sales on all products containing the substance. [‘net sales' = gross less - a) Transpo charges; b) Trade discounts and commissions; c) Credits or

allowances; d) Any tax, excise or government charge.] In case product contains the substance as admixed, royalty is computed using a formula. The patentees appealed to CA which dismissed the appeal. Hence, this petition. ISSUE Whether or not the Director of Patents may unilaterally determine terms and conditions of the compulsory license, without affording the parties an opportunity to negotiate. HELD Yes. Sec 35 of P.D. 1263, amending portions of RA 165 re ads: “GRANT OF LICENSE.—(1) If the Director finds that a case for the grant of a license under Sec. 34 hereof has h as been made out, he shall within 180 days from the date the petition was filed, order th e 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.” CA found that 2.5% royalty fixed by

the Director 'is just and reasonable.' This is based on Par 3, Sec 35- B, RA 165, as amended by PD 1263: “A compulsory license shall only be granted subject to the payment of adequate r oyalties commensurate with the extent to which the invention is worked. However, royalty payments shall not exceed 5% of the net wholesale price… If…in an industrial project… the royalty… shall not exceed 3% of the net wholesale price…”

Thus, said provision grants to the Director the use of his sound discretion in fixing the percentage for the royalty rate. Also, there is always a presumption of regularity in the performance of one's official duties. Furthermore, identical terms and conditions had been prescribed for the grant of compulsory license in a good number of patent cases involving UniLab. On another issue, the Director 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.