Intellectual Property Rights: Compulsory Licensing in India

Introduction

This article is a clarification of Compulsory Licensing managed under Intellectual Property Rights. Intellectual Property Rights alludes to the rights conceded with the intention to protect the inventions of the inventors. These rights incorporate Industrial Property Rights and trademark, or compulsory licensing under the Patent Act, 1970. Some other rights concerning these rights are that of the entertainers, makers and broadcasting associations.

Such licensing is covered under section 84 to 92 of The Patent Act, 1970 as well as under TRIPS agreement. Licenses are given to promote innovations that give a new method for accomplishing something or offers another technical answer for an issue. A patent is given only when the application for a patent contains all the information related to the product.

What is Compulsory Licensing[i]?

A compulsory license is an authorization given by the administration to a manufacturer for manufacturing, utilizing and selling a patented item without asking for the assent of the Patentee. The compulsory license is generally issued by the government when there is a national emergency or a health crisis[ii].

For example: In the present scenario, the country is facing a health crisis due to the outbreak of pandemic COVID-19 for which no vaccine is currently present. In future, if a vaccine is developed by an organization which cures this disease and a patent is taken over it and after such patent, the vaccine is sold at a very high price due to which people are not able to afford it, in such an instance, the government of India has the power to give compulsory license to other pharma organizations to manufacture the same vaccine at a much lower price so that every single citizen can afford that vaccine.

Who can apply for a compulsory license?

Section 84 of the Patents Act, 1970 incorporates the conditions which are required for the granting of a license.

According to this section, any interested person can submit an application to the concerned authority for such a license after three years have passed from the date of the grant of such patent.

Such application will only be permitted and license will be issued if any of the following condition is fulfilled[iii]:

  1. Pre-requisites of the general public concerning the patent-protected innovation have not been fulfilled.

  2. The patent-protected innovation is available at such a cost which is not affordable for the general public.

  3. Such patent-protected innovation is not utilized in India.

Special provisions for grant of such license is given under section 92 of the Act through a notification by the Government. If any of the following conditions are fulfilled then the government grants such license[iv]:

  1. In exceptional situations, when a product is meant to be exported to another nation, the government may grant a compulsory license.

  2. In the time of national emergency when there is an urgent requirement of a product by the public. For example, a compulsory license may be granted to pharma companies to make vaccines at affordable prices to cure COVID-19.

Opposition and Termination of Compulsory License

When an application is filed with the controller for the grant of such license and the controller after considering the application, in the light of section 84 of the Patent Act find it to be satisfying, the person making such an application is directed to send a copy of the same to the Patentee. The PatenteePatentee, if desirous of opposing such application may file a notice with the specified fee within the prescribed time i.e., two months from the date of application along. Such notice should incorporate statement containing the grounds on which such licensing is opposed.

After such an opposition, along with the evidence, is received by the controller and he finds such evidence satisfactory due to which the conditions and circumstances under Section 84 of the Patent Act, 1970 cease to exist, such license may be canceled.

Advantages of Compulsory Licensing

Compulsory licensing tends to have some advantages which are as follows:

  1. Misuse of IPR can be stopped through such licensing. Compulsory licensing tends to reward the Patentee for their innovation and at the same time ensures that the product is available to the general public at reasonable prices.

  2. Monopolies are a big problem for society. Compulsory licensing tends to solve such an issue of monopoly. By compulsory licensing, abuse of patent rights in the form of monopolies and different cartels can be solved.

  3. Governments also play a vital role as it keeps control over some of the dominant position of the organizations. Such licensing has an advantage over the industrial sector of the country as it helps in its development.

  4. In some cases, there is a delay from the side of the Patentee in the manufacturing of a product which results in a shortage of supply in the market. Through compulsory licensing, license to different organizations can be given to curb such shortage.

  5. Compulsory licensing will keep a check on the Patentee and will restrict Patentee from malpractices.

Trade-Related Aspects of Intellectual Property Rights[v] (TRIPS)

The WTO conference which took place at Doha in 2001 talked about the importance of public health in IPR. The result of this conference was that firstly, every member nation has a right to protect its people and provide them medicines at cheap prices. Secondly, members have the right to set conditions under which compulsory licenses would be given.

India, being a member of TRIPS, has well-established laws and different statutes in compliance with TRIPS. India has the authority to grant compulsory licenses as per the prerequisites mentioned in the act.


Judicial Decisions[vi]

I. Bayer Corporation v. Union of India (Bayer Corporation v. Natco Pharma)[vii]

This is India’s first-ever case in the field of compulsory licensing. In this case, the license was granted to Natco Pharma ltd., a Hyderabad-based pharma production company, on 09th March 2012 by the patent office for manufacturing of a conventional variant of Bayer’s ‘Nexavar’ which is an anti-cancer agent utilized in the treatment of liver and kidney disease. It was laid down in this case that only approximately 2% of the population having cancer was able to afford such medicine as it was sold at a monthly price of Rs. 2,80,000 by Bayer Corporation. Additionally, the patent office, after taking into account that Nexavar was imported in India, gave a license to Natco Pharma, which guaranteed of selling the tablets at Rs. 8,880/month. Further, it was settled that Natco was to pay Bayer 6% of the selling cost as royalty.


II. BDR Pharmaceuticals International Pvt. Ltd. V. Bristol-Myers Squibb Co.[viii]

In this case, the controller rejected the application for a grant of the compulsory license which was made by BDR Pharmaceuticals Int. Pvt. Ltd. On 04th March 2013 for producing a cancer drug ‘SPRYCEL’ which was manufactured by Bristol-Myers Squibb. Such rejection was made on the ground that the company was not able to make a prima facie case and couldn’t work for the public good.

III. Lee Pharma v AstraZeneca AB[ix]

In this case, a Hyderabad-based company, Lee Pharma filed an application in the patent office for compulsory licensing for manufacturing a diabetes medicine ‘Saxagliptin’ manufactured by AstraZeneca. Lee Pharma falsely contended that AstraZeneca did not respond in time to its request for a license. It also contended that:

1. AstraZeneca failed to serve the public

2. The price tag on medicines was unreasonably high

3. The medicine is not used in India

The controlled rejected the application because Lee Pharma failed to demonstrate the requirement of such medicine. It also failed to establish that the price of the drug is unreasonably high. In furtherance, the number of patients that were suffering due to the non-availability of drugs cannot be established.

Conclusion

Compulsory Licensing is the need of the hour. To meet the necessity of the public, compulsory licensing is the most appropriate step. Medical requirements are always present in the country and at that time if a drug that is patented is sold at an unreasonable price then the majority of the public will not be able to afford such medicine. To meet the requirements of the public, the government has to take a step forward. This step forward can be compulsory licensing which will not only help in meeting the requirements of the general public but will also keep the Patentee in check.

Therefore, Compulsory licensing can be said to be the game-changer in the field of IPR.

Footnotes

[i] Shinu Vig & Teena Bagga, Compulsory Licensing of Patents in India (2017) [ii] Rashmi Aggarwal & Rajinder Kaur, Patent law and intellectual property in the medical field (2017). [iii] Section 84 of The Patent Act, 1970 [iv] Section 92 of The Patent Act, 1970 [v] Helga Margrethe Beyer, Compulsory Licensing in the TRIPS agreement (2013) [vi] Ahmed Munnazzar, Legal Implications of Compulsory Licensing in India (2013) [vii] MANU/SCOR/53393/2014, AIR 2014 Bom 178 [viii] C.L.A. No. 1 of 2013 – Controller of Patents, Patents Office, Mumbai [ix] C.L.A. No. 1 of 2015

Submitted by,

Kushagra Khetan,

School of Law, University of Petroleum and Energy Studies.

© 2020 by AmicusX