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Compulsory Licensing in India

Compulsory licensing originates when government allows someone else to produce the patented product or process without the consent of the patent owner. In current public discussion, this is usually associated with pharmaceuticals, but it could also apply to patents in any field. The TRIPS Agreement allows compulsory licensing as part of the agreement's overall attempt to strike a balance between promoting access to existing drugs and promoting research and development into new drugs. But the term compulsory licensing does not appear in the TRIPS Agreement.

Instead, the phrase "other use without authorization of the right holder" appears in the title of Article 31. Compulsory licensing is only part of this, since the other use includes use by the government for their own purposes. Compulsory licensing and government use of a patent without the authorization of its owner can only be done under a number of conditions aimed at protecting the legitimate interests of the patent holder.

For example, normally, the person or company applying for a license must first attempt, unsuccessfully, to obtain a voluntary license from the right holder on reasonable commercial terms (Article 31h). However, for "national urgencies", "other circumstances of extreme urgency" or "public non-commercial use" (or government use) or anti competitive practices, there is no need to try for a voluntary license (Article 31b).

Compulsory licensing must meet certain additional requirements. In particular, it cannot be given exclusively to licensees and usually it must be granted mainly to supply the domestic market. The TRIPS Agreement does not specifically list the reasons that might be used to justify compulsory licensing. In Article 31, it does mention national emergencies, other circumstances of extreme urgency and anti-competitive practices- but only as grounds when some of the normal requirements for compulsory licensing do not apply, such as the need to try for a voluntary license first (Doha Declaration 5(b) and (c)).

Each member has the right to determine what constitutes national emergency or other circumstances of extreme urgency. It is generally understood that public health crisis, including those relating to HIV/AIDS, tuberculosis, malaria, and other epidemics like Anthrax, Dingy fever and Chicken Gunny affecting major part of the country, can represent a national emergency or other circumstances of extreme urgency.

Therefore we can say that, Compulsory Licensing is a system whereby the government allows third parties (other than patent holder) to produce and market a patented product or process without the consent of the patent owner. This mechanism enables timely intervention by the government to achieve equilibrium between two objectives rewarding inventions and in case of need, making them available to the public during the term of the patent. The following are the provisions relating to compulsory license in the Indian Patent Act.

Section 84: Compulsory License:
As per this provision of the Patents Act of India,, at any time after the expiration of three years from the date of the grant of patent, any person interested, may make an application to the controller for grant of compulsory license on patent on any of the following grounds, namely:
  • That the reasonable requirements of the public with respect to the patent 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.

Section 92: Special Provision For Compulsory Licenses On Notification Bby The Central Government:
As per the section 92 of the Indian Patent Act, if the central government is satisfied, in respect of any patent in force, in circumstances of national emergency or in circumstance of extreme urgency or in case of public non- commercial use, that it is necessary that compulsory license should be granted at any time after the sealing thereof to work the invention, it may make a declaration to the effect, by notification in the official gazette, and thereupon following provisions shall have effect, that is to say:
  • The controller shall on application made, at any time after the notification, by any person interested grant to the applicant a license under the patent on such terms and conditions as he thinks fit.
  • In setting the terms and conditions of a license granted under this section, the controller shall endeavor to secure that the articles manufactured under the patent shall be available to the public at the lowest price consistent with the patentees deriving a reasonable advantage from the patent right.

Section 92a: Compulsory License For Export Of Patented Pharmaceutical Products In Certain Exceptional Circumstances:
As per the section 92A of the Indian Patent Act, Compulsory License shall be available for manufacture and export of patented pharmaceutical products to any country having insufficient or no manufacturing capacity in the pharmaceutical sector for the concerned product to address public health problems, provided compulsory license has been granted by such country or such country has, by notification or otherwise, allowed importation of the patented pharmaceutical product from India.

Section 100: Power Of Central Government To Use Invention For Purposes Of Government:
As per the section 100 of Indian Patent Act, Central Government has the power to use inventions for the purposes of Government. The provision states that after an application for a patent has been filed at the patent office or a patent has been granted, the central government and any person authorized in writing by it may use the invention for the purposes of government in accordance with the provisions of chapter XVII of the Patent Act, 1970 (as amended in 2005).

Written By: Dr Farrukh Khan is a New Delhi-based lawyer and is managing partner of full service law firm Diwan Advocates.

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