Compulsory Licensing of Patents in India

India, one of the fastest-growing economies, is continuously striving to balance its social and economic goals. With the recent advances in science and technology, India's economy is shifting towards being more knowledge-intensive. In this context, the importance of Intellectual Property (IP) rights, especially patents, cannot be overstated.

Patents are crucial in promoting innovation and creativity, ultimately leading to economic growth. However, the monopoly rights granted by patents also have the potential to limit access to essential medicines and technology, thereby negatively impacting public health and welfare. This is where the concept of compulsory licensing comes into play.

What is Compulsory Licensing?

Compulsory licensing is a legal mechanism that allows a government to grant a license to a third party to manufacture and sell a patented product or process without the patent holder's consent.

The World Trade Organization (WTO) has recognized compulsory licensing as an essential tool for promoting public health, enabling developing countries to access affordable medicines they otherwise could not afford. In India, compulsory licensing is enshrined in the Patents Act of 1970, which provides for granting compulsory licenses in certain circumstances.

Compulsory Licensing Provisions under Indian Patent Law

Section 84 of the Indian Patents Act, 1970, provides for the grant of compulsory licenses in certain circumstances, including −

• Where the patentee has refused to grant a license on reasonable terms;

• Where the patented invention is not available to the public at a reasonable price;

• Where the patented invention is not worked in the territory of India.

In addition to these grounds, the Indian Patents Act was amended in 2012 to include a new provision, Section 92A, which allows the government to authorize exporting a patented product to another country with insufficient or no manufacturing capacity for the said product. This provision was added to comply with the obligations under the TRIPS Agreement, which requires WTO member countries to allow compulsory export licensing.

Compulsory Licensing Cases in India

Compulsory licenses have been granted in India in the past, and some of the notable cases are −

• Natco Pharma Ltd. v. Bayer Corporation − In 2012, Natco Pharma was granted a compulsory license to manufacture and sell a generic version of Bayer's cancer drug Nexavar, priced at Rs. 2.8 lakh per month. Natco Pharma was allowed to sell the generic version at a much lower price of Rs. 8,800 monthly. The Controller of Patents granted the compulsory license because the patented drug was not being made available to the public at a reasonable price.

• Lee Pharma v. AstraZeneca AB − In 2016, Lee Pharma was denied a compulsory license for AstraZeneca's diabetes drug Saxagliptin. The Controller of Patents rejected Lee Pharma's application, stating that the applicant failed to prove that the patented drug was not being made available to the public at a reasonable price.

• BDR Pharmaceuticals v. Bristol Myers Squibb − In 2020, BDR Pharmaceuticals was granted a compulsory license to manufacture and sell a generic version of Bristol Myers Squibb's cancer drug Dasatinib. The Controller of Patents granted the compulsory license on the ground that the patented drug was not being worked in the territory of India.

Conclusion

Compulsory licensing is a vital legal mechanism in promoting access to essential medicines and technology, especially in developing countries. In India, the concept of compulsory licensing is enshrined in the Patents Act, and the government has previously granted compulsory licenses.

However, the grant of compulsory licenses should be carefully balanced with the need to incentivize innovation and ensure that the patent system remains an effective tool for promoting creativity and economic growth. Therefore, it is essential to balance the interests of patent holders and public health, and the grant of compulsory licenses should only be considered in exceptional circumstances.

Moreover, ensuring that the grant of compulsory licenses is done transparently and somewhat is crucial, with adequate compensation for the patent holder. This will help to prevent misuse of the system and promote innovation.

Frequently Asked Questions

Q1. Which licenses are granted as compulsory licenses for patents?

Ans. Compulsory licenses are authorizations given to a third party by the Controller General to create, employ, or market a patented good or method without the consent of the patent holder.

Q2. What is compulsory licensing?

Ans. When a government imposes mandatory licensing, it either intends to use the patent-protected invention itself or permits someone else to manufacture a copyrighted good or method without the patent owner's consent.

Q3. Who gives compulsory licensing of patents in India?

Ans. This right is granted by the government of India and is valid for 20 years following the date of publication. However, this grant of the only right to use a patent is not unqualified; in certain instances, third persons may be permitted to utilize a patent by the issuance of a Compulsory license.

Q4. What is Article 31 compulsory licensing trips?

Ans. Article 31(f) of the TRIPS Agreement says products made under compulsory licensing must be “predominantly for the supply of the domestic market”

Q5. What are the benefits of compulsory licensing?

Ans. Compulsory license is a statutory license that gives the liberty to use the copyrighted work without permission from the copyright owner. It is an exclusive right to do an act related to the copyrighted work. This is practiced whenever a copyrighted work is withheld from the public domain.