The Indian Patents Act does not define the term compulsory licensing. However, a common interpretation of the term compulsory licensing is when a government allows someone else to produce a patented product or process without the consent of the patent owner or plans to use the patent-protected invention itself. The grant of compulsory licence is often misconstrued to mean the relinquishment of a patent holder’s rights over the patented invention. However, in reality, the patent holder continues to have rights over the patent, including a right to be paid for copies of the products made under the compulsory licence.
Chapter XVI of the Act stipulates the relevant provisions with respect to compulsory licensing in India. Specifically, Sections 84 and 92 of the Act provide the imperative conditions to be fulfilled to the grant of a compulsory licence.
As per Section 84 of the Act, any person, regardless of whether he is the holder of the licence of that Patent, can make a request to the Controller for grant of compulsory licence on expiry of three years from the date of grant of patent, when any of the following three conditions is fulfilled –
the reasonable requirements of the public with respect to the patented invention have not been satisfied;
the patented invention is not available to the public at a reasonably affordable price; or
the patented invention is not worked in the territory of India.
Further, compulsory licences can also be issued suo motu by the IPO under Section 92(1) of the Act, pursuant to a notification issued by the Central Government if there is either a ‘national emergency’ or ‘extreme urgency’ or in cases of ‘public non-commercial use’.
The main objective of Section 84 of the Act is to prevent the abuse of patent as a monopoly and to cut way for the commercial exploitation of an invention by an interested person. In addition to the three conditions mentioned above, Section 84(6) of the Act enunciates the key factors considered by the IPO while granting a compulsory licence, said factors including but not limited to:
the nature of the invention;
any measures already taken by the Patentees or any Licencee to make full use of the invention;
ability of the Applicant (requesting the compulsory licence) to work the invention to the public advantage;
the capacity of the Applicant to undertake the risk in providing capital and working the invention, if such application for compulsory licence were granted;
time elapsed since the grant of the patent i.e. worked or not worked.
Whether the Applicant has made efforts to obtain a license from the Patentee on reasonable terms and conditions and such efforts have not been successful within a reasonable period [‘reasonable period’ construed as a period not ordinarily exceeding a period of six months].
The provisions in the Act related to compulsory licence finds its’ roots in the endeavour of the Indian Parliament to strike the right balance between the interests of innovators and the wider public interest in order to foster an environment in which creativity and innovation can flourish.
As stipulated in Section 83 of the Act, patents are not granted merely to enable patentees to enjoy a monopoly on a patented article. Said provision emphasizes the general consideration that the patent right is not abused by the patentee or person deriving title or interest on patent from the patentee, and the patentee or a person deriving title or interest on patent from the patentee does not resort to practices which unreasonably restrain trade or adversely affect the international transfer of technology, among other considerations.
The IPO, while deciding an application for compulsory licensing, noted that “from its very nature, a right cannot be absolute. Whenever conferred upon a patentee, the right also carries accompanying obligations towards the public at large. These rights and obligations, if religiously enjoyed and discharged, will balance out each other. A slight imbalance may fetch highly undesirable results. It is this fine balance of rights and obligations that is in question in this case”.
Landmark Compulsory Licensing Cases
The provisions related to Compulsory licensing in India are often misconstrued as deprivative and intrusive by patent holders. The monetary investments made by patent holders for the research, development and prosecution of patented inventions, specifically pharmaceutical inventions, are a common concern. Critics are usually of the view that patent laws have been enacted to encourage innovation, technical advancement, technological progress, transfer of technology and thereby ultimately attain the common cause of development. Innovative drugs are significantly more expensive than generic medicines on account of complex processes which are required to make the invention. It may be after thousands of trials in several permutations and combinations that a molecule reaches the market and then to the patients.
The concerns of patent holders in this regard, specifically pharmaceutical companies, have not fallen on deaf ears. On various occasions, the IPO and the Indian Courts have acknowledged and appreciated the investments in terms of time, money and efforts made by pharmaceutical companies for the development of pharmaceutical inventions. Both, the patent office and the Courts have aligned their practice in matters of compulsory licensing, taking a pro-patent stand by interpreting the relevant provisions with a view to protect and uphold the rights of the Patentee. A stern and severe test has been observed for the Applicants filing for compulsory licences. The same is evident from the fact that in the duration of 2012 – 2017, merely 3 applications requesting a compulsory licence have been filed with the IPO, out of which only one of said applications has been granted. It is also pertinent to note that in the case where a compulsory licence was in fact granted, all three conditions stipulated in Section 84 were satisfied and the same is attributed by experts to be a vital reason behind the expeditious passage of the judgement.
Below is a timeline of the cases decided by the IPO with respect to Compulsory Licensing.
PHARMACEUTICAL PATENTING IN INDIA - BREAKING MYTHS