Patent, as defined by WIPO, means an exclusive right granted for an invention, which is a product or a process that provides, in general, a new way of doing something, or provides us with a new technical solution to a problem. A patentee shall have exclusive rights over his invention for 20 years, and he can exclude others from making any use of his patented product. But under certain circumstances, a compulsory license to make use of a patented product may be given to a third party. This concept of compulsory licensing has been given in chapter XVI of the Indian Patents Act, 1970.
This paper outlines the concept of compulsory licensing which is followed by the detailed study on the law which states the grounds for compulsory licensing. The procedure and important case law have been discussed briefly followed by the conclusion.
Compulsory Licensing under the Indian Patents Act,1970
Compulsory licensing is the authorization given to the third party by the Government to make, use or sell a particular product which has been patented, without the permission or consent of the patent owner. Indian Patent Act, 1970, Section 84
This concept is recognised at both national as well as international levels, with an express mention in both (Indian) Patent Act, 1970 and TRIPS Agreement. There are certain pre-requisite conditions, given under sections 84-92, which need to be fulfilled if a compulsory license is to be granted in favour of someone.
According to section 84 of the Indian Patent Act, 1970 which grants for compulsory licenses, any person interested at any time after the expiration of three years from the date of grant of a patent may make an application to the Controller for the grant of a compulsory license on patent on the ground that the patented inventions:
a. It does not satisfy the requirement of the public,
b. It is not available to the public at a reasonable affordable price and
c. Is not worked in the territory of India.
A party interested may apply for a compulsory licence online or on paper via Form 17, along with a prescribed fee, with the Indian patent office. Form 17 should be accompanied by a statement setting out the nature of the applicant’s interest, together with the facts and particulars on which the application is based.
However, following section 92A of the Act, compulsory licensing can also be done for exports under exceptional circumstances, in case of national emergency and country which has no means and manufacturing power in the pharmaceutical sector to address public health.
The Controller takes into account some more factors like the nature of the invention, the capability of the applicant to use the product for the public benefit and the reasonability, but the ultimate discretion lies with him to grant the compulsory license. Even after a compulsory license is granted to a third party, the patent owner still has rights over the patent, including a right to be paid for copies of the products made under the compulsory license.
Procedure for processing compulsory licence application
The controller will analyse the prima facie case made by the applicant against the patentee only after applying for the grant of a compulsory licence along with the relevant facts and evidence. The nature of the invention, the applicant’s ability to work the invention and whether the applicant has made efforts to obtain a licence from the patentee on reasonable terms and, if such efforts have not been successful within a reasonable period (i.e., six months from the date of application) are the factors after which the controller will decide whether to grant or reject the compulsory licence.
In case the controller is not satisfied with the applicant’s request, a notice will be issued to the applicant regarding the rejection of the grant of a compulsory licence. However, the applicant may request a hearing with the controller, within one month from the date of such notice of rejection. Thereafter, the controller will decide the fate of the application based on the hearing discussion held with the applicant.
Relevant Case Laws
The turning point in the Indian Judiciary was when the first time the compulsory licensing was granted by the patent office in 2012 in the case of Natco v. Bayer. An Indian company called Natco Pharma for the generic production of Bayer Corporation’s Nexavar, the medicine used for treating Liver and Kidney cancer. The dosage cost was Rs.2.8 lakh but Natco Pharma offered to sell it for Rs.90,000 a lifesaving drug accessible to society at large and not just for wealthy persons. However, this decision was criticized by the Pharmaceutical Companies as the license should not have been granted. But the general principles laid down under section 83 of the Act, which is applicable for the working of the patented invention say that “patents granted do not anyway prohibit central government in taking the measures to protect the public health”.
In Lee Pharma v AstraZeneca, the most recent case of compulsory licensing in India, Lee Pharma, a Hyderabad-based Indian pharma company, applied for a compulsory licence on 29 June 2015 for the patent covering AstraZeneca’s diabetes management drug Saxagliptin. Now to make a prima facie case, it was declared by Lee Pharma that request for a licence with the patent owner was not responded to within a reasonable period. The grounds alleged by Lee Pharma were that: the patentee failed to meet the reasonable requirements of the public; the patented invention is unavailable to the public at a reasonably affordable price; and the patented invention is not used in India.
However, all three grounds, as well as the compulsory application, were rejected. The ground for rejecting the application was on the basis that Lee Pharma failed to demonstrate the reasonable requirement of the public and further failed to demonstrate the comparative requirement of Saxagliptin with other drugs in the market. Further, it was held by the controller that all the related drugs which were available in the market were in the same price range and the allegation that Saxagliptin alone was being sold at an unaffordable price was not justified. It was further stated by the controller that Lee Pharma failed to demonstrate the exact number of patients that we’re unable to obtain the drug due to its non-availability.
In some more cases related to grant of compulsory license in the pharmaceutical industry, the controller rejected the grant on various grounds like failing to prove prima facie case, not applying for a license of a patent before applying for a compulsory license and failure to prove public use of the product sought to be used by the compulsory license. It is said that in the law of patents, it is not sufficient merely to have registration of a patent. The Court must look at the whole case, the strength of the case of the patentee and the strength of the defence.
The judicial approach concerning the grant of compulsory licenses is that there must a balance between the rights and making use of the product for welfare purposes, the provision is for public welfare and it cannot be misused to infringe the rights of the patent holders.
Compulsory licensing is vital for underdeveloped and developing countries. As the resources which are not available in some countries can be a necessity for that country. Medicine and drugs are a necessity for society and if a patented drug is available in a country but is very expensive that a normal person can’t afford that drug then the government has to make such drugs available for the people who cannot afford it. Here, the compulsory license comes into the picture. Compulsory licenses will make a similar product available to the people who does not have the means to afford that drug. A compulsory license stops the misuse of Intellectual property rights. It gives recognition to the owner of the patent keeping in mind the limitation for the owner. The concept of compulsory license lies in adjusting the patentee’s rights and making the product accessible at a reasonable cost to outsiders.
- What do you understand by the term Patent?
The term patent as defined by WIPO means an exclusive right granted for an invention, which is a product or a process that provides, in general, a new way of doing something, or provides us with a new technical solution to a problem.
- What is compulsory licensing under Indian Patents Act,1970?
Compulsory licensing means the authorization given to the third party by the Government to make, use or sell a particular product which has been patented, without the permission or consent of the patent owner.
- Who can apply for compulsory licensing?
As per section 84 of the Indian Patents Act, 1870any person interested at any time after the expiration of three years from the date of grant of a patent may make an application to the Controller for the grant of a compulsory license on patent on the ground that the patented inventions:
- It does not satisfy the requirement of the public,
- It is not available to the public at a reasonable affordable price and
- Is not worked in the territory of India.
- What is the procedure for processing compulsory licensing?
The controller will analyse the prima facie case made by the applicant against the patentee only after filing the application for grant of a compulsory licence along with the relevant facts and evidence. The nature of the invention, the applicant’s ability to work the invention and whether the applicant has made efforts to obtain a licence from the patentee on reasonable terms and, if such efforts have not been successful within a reasonable period (i.e., six months from the date of application) are the factors after which the controller will decide whether to grant or reject the compulsory licence.
- What are important case laws related to compulsory licensing?
The first case on compulsory licensing in India was Natco vs Bayerand the recent case was Lee Pharma v AstraZeneca AB.
- Ahuja V.K, 2nd Edition LexisNexis, Law Relating to Intellectual Property Rights.