compulsory licensing

In this article, Karan Singh of JGLS discusses Compulsory Licensing of Patents in India.

“There’s this thing called compulsory licensing law that allows artists through the record companies to take your music at will without your permission”Prince

Introduction

This article is an explanation to Compulsory Licensing dealt under Intellectual Property Rights. Intellectual Property Rights refers to the legal rights granted with the aim to protect the creations of the invention. These rights include Industrial Property Rights i.e industrial designs and trademarks, or compulsory licensing under patent act and copyright i.e right of the author or creator. Some related rights are also there like rights of the performers, producers and broadcasting organisations.

Compulsory licensing comes under The Patent Act, 1970. Patents are granted to promote new inventions which is a product or a process that provides a new way of doing something or offers a new technical solution to a problem. To get a patent, technical information about the invention must be disclosed to the public in a patent application.

What is compulsory licensing

Compulsory licensing is a measure which is provided by the patent act. It ensure that the patentee do not misuse their patent rights. Compulsory Licensing is given only for public health and nutrition. Simply speaking, it is a license given to a 3rd party to manufacture, use, or sell the product or use the process that provides a new way of doing something which has been already granted patent without the permission of the owner. This is done for the public health, or in national emergency and health crisis. As this license works against the owner of the patent there are conditions that are given by the government to be fulfilled.

For example: If a drug that is already patent is available at a very high price and poor people of the society can not buy it, then government can give compulsory license to the other pharmaceutical companies to make the same drug at a low rate. This is done so that people can have access to that drug at cheap price also.

Status of Compulsory Licensing in India

Compulsory Licensing was first given to a company in 2012. Under the Indian Patent Act, conditions for granting of compulsory licensing are given. The conditions which need to be fulfilled in order for a compulsory license to be granted are given under section 84 and 92 of the Indian Patent Act, 1970. If any company wants a compulsory license of any product then they should follow these two sections. These sections are explained below:

Section 84 of Patent Act, 1970

As per this section, any person who is interested or already a holder of the license under the patent can make a request to the controller for grant of compulsory licence on patent after three years from the date of grant of that patent on the existence of conditions mentioned in the section 84 of the patents act, 1970. Compulsory licence will be granted on the following grounds:

  • That the reasonable requirements of the public with respect to the patented invention have not been satisfied or,
  • That the patented invention is not available to the public at a reasonably affordable price or,
  • That the patented invention is not worked in the territory of India.

These are the few grounds on which the compulsory licence will be granted. If the product is not available to the public at a reasonably affordable price, if the public is not satisfied with the patented invention or if the product is not available in the territory of India.

Section 92 of Patent Act, 1970

This section deals with other grounds on which the compulsory licence will be granted. These are special provision for compulsory licences on notifications by central Government. Government grants compulsory licences in the following grounds:

  • For exports, If the product is used for exporting to another country then government can grant licenses but this is only in exceptional circumstances.
  • If there is national emergency, this is the case where the product is needed on an urgent basis like in war or in health crisis. For example, licence is granted to the companies of manufacturing guns at the time of war or licenses granted to drug companies to manufacture the patented drug at the time of health crisis.

Advantages of Compulsory Licensing

  • Compulsory licence stops the abuse of Intellectual property rights. It gives reward to the owner of the patent keeping in mind the limitation for the owner. It helps in rewarding the patentee for their invention and making the product available to the society at reasonably affordable rate. Compulsory licensing sometimes becomes unavoidable as to save lives of the populace by ensuring accessibility of the products at affordable rate. It also helps to break the monopolies and cartel which are some of the abuses of patent rights.
  • It is very important for the government to keep a control over the use of dominant position of the companies. Compulsory licensing will help in Indian industrial sectors development. The size of the Indian market is one of the biggest in the world, compulsory licensing will help to make the products more accessible to public and it will beneficial for public welfare.
  • Sometimes the patentee of the products delays in development of important technology which give rise to a deadlocks between the improver and the original patentee. Compulsory Licensing can be used as an effective tool to resolve these deadlocks by pressurizing the original patentee to come to the terms of an agreement with the improver. It can therefore help in generating rapid technical progress.

How compulsory licensing is helping industries to grow

  • Availability of goods and services at affordable prices to the developing and underdeveloped countries.
  • The local industries which obtain compulsory license for the patented goods can produce employment for thousands of workers and therefore reduce unemployment.
  • In order to advance in science and technology, underdeveloped countries need maximum access to intellectual property of advances nations.
  • More than 80% patents in developing and underdeveloped countries are owned by citizens of developed countries. So, Compulsory licensing will help the underdeveloped countries to have access to the patented products.

The First Case of Compulsory Licensing in India

Natco Pharma Ltd. is the first company to file for compulsory licensing for producing generic version of Bayer’s Corporation’s patented medicine Nexavar, used in the treatment of kidney and liver cancer. In India, the patent office in 2012 granted the compulsory license to Natco Pharma for the same drug. It was argued by the Natco Pharma that the public does not have access to this drug at affordable price and the patented invention was not worked in India. All the 3 conditions of sec 84 was fulfilled that,

  • The reasonable requirements of the public were not fulfilled
  • That it is not available at an affordable price
  • Patented invention was not worked around in India.

So, Natco applied for the compulsory license under section 84 of the Patent Act for Bayer’s patented drug Nexavar. Nexavar was available by the Bayer Corporation for $ 6299 for a month’s course. Natco Pharma proposed that it the same drug will be available by the name of Sorafenib Tosylate for just $196. It was proposed that it will benefit the whole population of India which is in millions. The government decided for the general public health and granted the compulsory license to the Natco Pharma.

Trade Related Aspects of Intellectual Property Rights (Trips)

The Doha Conference 2001 of WTO adopted declaration that realizes the importance of public health as compare to IPR. It was decided in that conference that the countries have right to protect public health and provide cheap medicines. It was also decided for all the members that rights are also given to all the countries to decide the right under what conditions it can use compulsory licenses.

As India is a member to TRIPS, it may be noted that India has a well established TRIPS compliant legislative, administrative and judicial framework to safeguard IPRs. Under the Doha Declaration on the TRIPS agreement, each and every member has a right to grant compulsory licenses on the grounds that is mentioned in the Act. India can grant such licenses and have a right to grant compulsory licenses under certain circumstances such as public health emergencies to ensure access to affordable products.

Conclusion

Compulsory licensing is important for a underdeveloped or developing countries. As, the resources which are not available in the a particular country can be a necessity for that country. Medicine is a necessity for the society and if a patented drug is available in a country but is very expensive that a normal person can not afford that drug then the government of that country has to do something for the people who can not afford it. Here, the compulsory license role comes in. Compulsory licenses will make the similar product available to the people who can not afford that drug.

TRIPS agreement for the public health was the first step by WHO to protect the people from sickness and diseases which is common in countries but the medicine is not available.

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