Compulsory Licensing

An Emerging Trend Towards Indian Patent Regime

By Supriya Kumari
Damodaram Sanjivayya National Law University, Visakhapatnam

Introduction
Protection of intellectual property rights
allows
research work and knowledge
generation and is a mechanism to protect
IPR rights.
The provision of Compulsory License
enables the government to balance the
rights of the Patent holder with its
obligations to ensure
a) Working of Patents,
b) Availability of the products at a reasonable
price,
c)
Promotion
and
dissemination
of
technological invention and

Patent
A patent is a grant from the Government
on patentee.
For a limited period of time.
The exclusive privilege of making, selling
and using the invention for which a patent
has been granted.

Purpose of Patent
To enjoy the exclusive rights over the
invention.
To ensure commercial returns to the
inventor and money spend in generating a
new product.
It promote public interest in sectors of
Socio-Economic
and
Technological
development of India.

Three Test To Be Patentable

An invention must have three tests: The invention must be Novel
The invention must be Non Obvious
The invention must have Industrial
applicability

Protection Under Indian Law

The Patent Act of 1970 was passed to
govern the granting of Patent under
Indian Law.
The Act got amended in 1999, 2002, 2005
to compliant with Trade Related Aspects of
Intellectual
Property
Law
(TRIPS)
Agreement.

Safeguards
Provision is to ensure availability of drugs
at reasonable prices .
Provision is to deal with public health
emergency.
Revocation of Patent in public interest and
on security considerations.

Compulsory Licensing

Compulsory Licensing (sec 84-92)

a. Compulsory Licensing is when a Government

authorises a party other than the Patent
owner to produce the patented product or
process, without the patent owner's consent.
b.

It Limits the rights of the of exclusive

ownership conferred by the Patents.

Statutory Provisions
The provisions of CL comes Under Chapter XVI
of the Patent Act comprising sections 84 to 92.
The Patent Act allows for grant of Compulsory
License on two grounds
a) Abuse of Patent Right (sec 84(1))
b) Public Interest (sec 92 (A))

Background
The concept of Compulsory Licensing
originated in the UK in 1623.
For making the local application possible for a
patented invention.
In 19th century in France, a law was passed to
forfeit a patent, if not used for a stipulated
time frame.
UK Provision to grant a Compulsory License
under Patent Act
1. If the patent was not being utilized in the UK.
2. If the basic necessities of the public were
hindered.
3. If any person is prevented from using or

Continued
TRIPS requires that the compulsory Licensing
to be used primarily.
To benefit the local markets.
It is a requirement that puts restriction on
Governments
for
importing
drugs
manufactured overseas.

Legal Perspective
License Under the Paris Convention (1883)
State to take legislative measures for
granting compulsory licenses. According to
Article 5A (2) of the Paris Convention
Each country have the right to take
legislative measures for the grant of
Compulsory License.
It is to prevent the abuses due to the
exercise of the exclusive rights conferred by
the patent.

Continued.
Under TRIPS (1995)
Article 30, it limits the exceptions to the rights
conferred under patents.
Provided they do not unreasonably prejudice
the legitimate interests of the patent owner,
Taking into account the legitimate interests of
third parties.
Article 31, it refers to Compulsory Licensing as
other use without Authorization of the rights
holder, but allows countries to do so only
under certain conditions.

Application For Obtaining Compulsory License

The Application should be made after three
years of grant of Patent.
The Application should be made by a person
interested as defined by Sec 2(t) of the Indian
Patents Act.
The party applying for Compulsory Licensing
must have sought to obtain a voluntary
license from the patentee on reasonable
terms.
such efforts have not been successful within a
reasonable period as per the Controller of
Patents.

Grounds For Compulsory Licensing

Sec. 84 lays down three grounds for grant of a
Compulsory License
That the reasonable requirements of the
public with respect to the patented invention
have not been satisfied.
That the patented invention is not available
to the public at a reasonably affordable price.
That the patented invention is not worked in
the Territory of India.

Procedure
Licensing

For

Compulsory

Upon receiving an application the Controller

determines whether a prima facie case is
made out.
An opportunity shall be given to the patentee
or any other person to file opposition to grant
of said License..
After the notice of opposition is filed, the
Controller shall fix a date for hearing of the
Case.
After the hearing, an appeal shall lie to the
Appellate board from all decisions of the
Controller within a period of six months.

Impact Of Compulsory Licensing

Innovation
a. Decline the innovation as it will hamper the
desire of the pharmaceutical companies of
the developing countries.
b. Developing countries may dependent on the
generic medicines.
c. Research based pharmaceutical companies
will not launch patent molecule.
.Competition and Cost
a. CL will lead to increases in the competition.
b. New generic companies come into the role to
capture the high market share.

 Patients
a. Compulsory Licensing extensively helpful
for the Financially challenged patients of
developing countries.
b. It is easy to access the medicines at
lower prices for maintaining good health.

Global Perspective
a. Developing
countries
are
giving
importance to Compulsory License due to
unavailability and unaffordability of
medicines.
b. Developed countries like U.S and Europe
are opposing it due to decline in
innovation.

Compulsory License On Notification

By Central Government

Grounds on which a Compulsory License may be

granted by the Government. (Section 93(A))
a.
b.

National Emergency
Extreme urgency

c. Public Non Commercial

. If the government is satisfied that it is necessary
that Compulsory License be granted, may make a
declaration by notification in the Official Gazette.
.On such declaration any interested party may
make an application for CL and the same shall be
granted as per terms and conditions set by the
Controller.

Compulsory Licensing For Export Of

Pharmaceutical Products
Under TRIPS Article 31(f)and Section 92A of the
Act, (amendment 2005)
CL shall be available for the Manufacture and
Export of patented pharmaceutical product to
any licensed Country.
The Controller shall, on receipt of an application
in the prescribed manner, grant a Compulsory
Licence to pharmaceutical products.
It shall be without prejudice to which
pharmaceutical products produced under a
Compulsory Licence can be exported.

Bayers Vs. Natco Case

Bayer v/s Natco was the first case of compulsory
licensing being obtained in India in Pharmaceutical
field of discipline.
The Controller General of India passed an order of
Compulsory License against Bayers patent on drug
Nexavar on March 09, 2012, which is Indias first
Compulsory License .
Nexavar, an anti-cancer drug, chemically known as
Sorafenib tosylate.
Hyderabad based Natco had filed an application
for issue of Compulsory License to manufacture the
low-cost version of Nexavar.

Continued.
The Compulsory License was granted in
accordance with the grounds described under
sec 84 of the Indian Patent Act.
The License is valid till expiry of the Patent in
2021.
The Compulsory License enables Natco to
sell the drug at a price not exceeding Rs
8,880 for a pack of 120 tablets (one months
therapy) as against Rs 2,84,428 being the
cost of Nexavar sold by Bayer.
The order also makes it obligatory for Natco
to supply the drug free of cost to at least 600
needy patients per year.

Terms and Condition for Grant of Compulsory License

Sec 90 lays down certain terms and conditions

that the Controller shall endeavour to secure for
the patentee a. That the patented invention is worked to the
fullest extent by the person to whom the licence
is granted and with reasonable profit to him.
b. That the patented articles are made available to
the public at reasonably affordable prices.
c. That the Licence granted is a Non-Exclusive
Licence.
d. That the right of the Licensee is Non-Assignable.
e. That the Licence is for the balance term of the
Patent.

Loopholes
Sharp decrease in price
Conflict between the Developed and
Developing countries over the use of
Compulsory Licensing.
Controversy in the Article 31 due to its
ambiguity on the issue of determining the
proper Economic value of the Compulsory
License.

Conclusion
It can be concluded that compulsory Licensing
now became the new hope for the Financially
challenged patients.
It is challenge for the Innovators and can turns
into the most concerned Intellectual Property
matter around the globe at this present scenario.
It is strongly recommended that Compulsory
Licenses be issued whenever pressing
circumstances demand.
This will work as a deterrent against misuse of
Patent Rights by the patent holders.

THANK YOU