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Compulsory License Under Patents Act, 1970

A landmark judgement named Bayer Corporation v. Union of India[1], in 2019 passed to resolve the issue of granting of a compulsory license under Section 84. This case is first in India dealing with this issue.

Compulsory license means authorizing or permitting to sell a patented particular product or use a patented particular process, without the need of the permission of the patent owner. This license is provided by Government to third party.[2]

There are some statutory provisions on national level regarding compulsory license in Chapter XVI (Section 84, 92) Patents Act, 1970. And there are some other provisions also on international level which are provided in TRIPS (Trade Related aspects of Intellectual Property Rights) Agreement[3]. But there are certain conditions to be fulfilled to take the grant of compulsory license, which are clearly mentioned in Section 84 and 92 of the Patents Act.

Patent is a exclusive right provided to a person who invents a new product or new process and that new technology[4] must be useful. It is provided by means of granting a license to a particular person, and it is granted for a certain period of time only to the inventor.[5] There has been three amendments in The Patents Act, 1970 as first in 1999, second in 2022 and third in 2005. These three amendments are done to specify the concept of ‘compulsory license' and are mentioned in the Section 82 to 94 of Act of 1970 respectively[6].

Procedure for filing the application of Compulsory license under Section 84[7]:

When an application is filed for grant of compulsory license before controller, it must contain all the relevant facts and evidence supporting the same. Then it is the discretion of controller, he will examine the case and analyse the prima facie things in application made against patentee. Controller will analyse some factors on which basis he will decide whether to grant the compulsory license or to reject the application of granting license.[8],[9],[10] Such factors are:
  • Nature of the invention:

    Invention of a particular thing or process must be new and useful
     
  • Ability of applicant:

    An applicant must be capable to work for invention
     
  • Efforts of the applicant:

    Applicant must made some efforts to obtain the license from patentee on reasonable terms and convince controller from his efforts.

After considering all the factors, if controller is satisfied than he may grant compulsory license and if he is not satisfies with the application then he will reject[11] the grant of compulsory license by issuing of a notice which contains the information about same. In this case, applicant may also have some issues regarding this rejection. If yes, then he may request for a hearing with controller thereafter, within one month from the date of issuance of such rejection notice. However, the controller will decide whether the hearing with applicant based on rejection application will held or not.

According to the Section 84 of Patents Act, 1970 : At any time after the expiration of three years from the date of the grant of a patent, somebody interested may make an application to the Controller for grant of compulsory license on patent on any of the subsequent grounds, namely:
  1. That the reasonable requirements of the general public with reference to the patented invention haven't been satisfied,
  2. that the patented invention isn't available to the general public at a fairly affordable price,[12]
  3. that the patented invention isn't worked within the territory of India.[13]
As per Section 84, somebody who is interested or already the holder of the license under the Patent can make asking to the Controller for grant of compulsory license on expiry of period three years only when the conditions[14] are fulfilled which are mentioned above in Section.

Sometimes, compulsory licenses may also be granted, when:

  1. Section 92:

    Export can be done under exceptional circumstances only.[15]
     
  2. Section 92A:

    Compulsory license can be granted case of national emergency where it has been notified by Central Government that it is extremely urgent for public non-commercial use.
     
  3. Section 92 A (1):

    Compulsory license will be granted to country which does not have sufficient means to work for public health or does not have enough manufacturing means in pharmaceutical sector.
There has been a global perspective of compulsory license always, as this is a highly debatable issue all over the world. Developed countries are working on getting compulsory license but developed countries are not trying this. Developed countries are opposing this as it would increase difficulty for invention for pharmaceutical companies. Developing countries are giving that much importance to compulsory license because of the unavailability and unaffordability of the medicines, drugs to all people at reasonable price.[16] Developing counties are continuously granting more compulsory licences.

India's first case[17] of granting compulsory license was granted by the Patent and Trademark Office Database in 2012 to an Indian Company called Natco Pharma for the generic production of company named Bayer Corporation's Nexavar.[18] All the three conditions of Sec 84 was fulfilled that the reasonable requirements of the general public weren't fulfilled, which it had been not available at an inexpensive price which the patented invention wasn't worked around in India.

This medicine is employed for treating Liver and Kidney Cancer, and one month's worth of dosage costs around Rs 2.8 Lakh. Natco Pharma offered to sell it around for Rd 9000 making this potentially lifesaving drug easily accessible to any or all parts of the society and not just the rich people. the govt. took this decision for the overall public benefit.

However, it had been heavily criticized by the Pharmaceutical Companies as they felt the license mustn't are given. However, Natco Pharma is paying the royalties to Bayer at a rate of 6% of all sales which are based on quarterly basis according to the rules which are set by the United Nation Development Programme (UNDP).[19] The Health Ministry of India, in January 2013 recommended three anti-cancer drugs trastuzumab, ixabepilone, and dasatinib for granting of compulsory licenses. This can allow the government to sell these drugs at a significantly cheaper price and can also allow the those who cannot afford the drugs originally, access to those drugs.[20]

The areas which are able to be impacted by compulsory license are as follows:

  1. Innovation:

    In Underdeveloped countries, the innovation of pharmaceutical companies are less as they are going to be obsessed with generic drugs. They are going to prefer getting the compulsory license to a drug instead of funding the Research & Development separately, which is usually awfully costly thing.
     
  2. Moreover, research based pharmaceutical companies won't launch patent module within the developing countries as there's always the chance of losing the patent, and losing money in research.
     
  3. Competition & Cost:

    Compulsory licensing will increase the quantity of companies producing generic medicines. Hence the provision will go up, and therefore the cost will come down. this can also force the innovator countries to introduce differential pricing of their patent module in order that they'll stand on the market.
     
  4. Patients:

    Patients will be able get medicines at a reasonable price or significantly cheaper rate. Also, the massive pharmaceutical companies often introduce plans like free access to medicine to guard their patents within the developing countries.

The patient versus patent issue is one in every of the foremost important problems now under the modern healthcare system. Although India has only passed one compulsory license yet, the quantity of compulsory licenses granted worldwide is on the increase.

The underdeveloped and developing countries want to pass compulsory licenses, and also the developed, and also the big pharmaceutical companies don't want the compulsory licenses to be passed. the most reason the large pharmaceutical companies don't want compulsory licenses to be passed is that it takes lots of cash and energy to make the drugs, and even then there's no certainty. they need to recoup the prices of the innovation.

Hence the businesses need to fix the value of their patented module in step with the economic status of the country if they require to shield their product from compulsory licensing. India, particularly, faces a challenge, as a result of the condition of the bulk population.

On one hand, it's to comply strictly with the international standards of patent protection and on the opposite hand, it's to safeguard public health. I would like to say that compulsory licensing has now become the hope for financially challenged patients in underdeveloped countries who do not have resources for their treatment, and compulsory licensing is now one in every of the foremost controversial topics in International Property matters.[21]

The ruling could be a landmark precedent on access to medicines in India because the abuse of patent rights[22] has been checked through the issuance of a compulsory licence for the primary time. on condition that the foremost recent cancer drugs are a superior choice to traditional chemotherapy treatments, but are so expensive their high cost has put them out of reach of the soul. There are some other cases also as, BDR Pharmaceuticals International Pvt Ltd v Bristol-Myers Squibb Co[23] and Lee Pharma v AstraZeneca A[24] for the purpose of granting of compulsory license.

End-Notes:
  1. AIR 2014 Bom 178
  2. Arnold JG. International Compulsory Licensing: The Rationales and the Reality, IDEA: The Journal of Law and Technology, 1993; 33(2): 349.
  3. Compulsory Licensing of Pharmaceuticals and TRIPS. TRIPS and Health: Frequently Asked Questions; World Trade Organization. Available at https://www.wto.org/english/tratop_e/trips_e/public _health_faq_e.htm (accessed 16 December 2015).
  4. Natco Pharma Ltd., India v. Bayer Corporation, USA. C.L.A No. 1 of 2011. March 9, 2012. P. H. Kurian, Controller of Patents, Mumbai. Available at: http://ipindia.nic.in/ipoNew/compulsory_License_12 032012.pdf (accessed 20 January 2016).
  5. Gupta R. Compulsory Licensing under TRIPS: How aFar it Addresses Public Health Concerns in Developing Nations. Journal of Intellectual Property Rights, 2010; 15: 357-363.
  6. The Patents Act, 1970 (No. 39 of 1970) [as amended by Patents (Amendent) Act, 2005 (No. 15 of 2005)]
  7. http://ipindia.nic.in/ipr/patent/eVersion_ActRules/sections/ps84.html
  8. The Patent Rules, 2003, Rule 98
  9. The Patents Act, 1970, section 84(6)
  10. Ibid., section 94
  11. Ibid., 1970, section 91
  12. BAYER CORP. V. UNION OF INDIA, Available at http://www.indialaw.in/blog/blog/intellectual-property-rights/bayer-corp-v-union-of-india/
  13. http://health.economictimes.indiatimes.com/news/pharma/india-rejects-lee-pharmas-compulsory-licenceplea/48521691
  14. Ibid., section 87
  15. Natco Pharma Ltd. v. Bayer Corporation. C.L.A No. 1 of 2011. March 9, 2012. Available at: http://ipindia.nic.in/ipoNew/compulsory_License_12 032012.pdf (accessed 29 June 2014).
  16. Gopalakrishnan NS, Anand M. Compulsory Licence Under Indian Patent Law. In: Liu KC, Hilty RM, editors. Compulsory Licensing: Practical Experiences and Ways Forward. London. SpringerVerlag Berlin Heidelberg; 2015. Ibid., p. 26 The Patents Act,
  17. https://indiancaselaws.wordpress.com/2013/12/14/bayercorporation-and-ors-vs-union-of-india-uoi-and-ors/
  18. Dewan M. Compulsory License Revisited India. Available at: http://www.rkdewan.com/articledetails.php/articlede tails.php?artid=150 (accessed 08 July 2015).
  19. www.manupatra.com
  20. LANDMARK JUDGEMENTS IN PATENT LAW, Available at http://www.talwaradvocates.com/landmark-judgements-patent-law/
  21. Current Scenario of Patent Act published by Indian Journal of Pharmaceutical Education and Research
  22. Kaur A, Chaturvedi R. Compulsory Licensing of Drugs and Pharmaceuticals: Issues and Dilemma. Journal of Intellectual Property Rights, 2015; 20): 279-287.
  23. http://spicyip.com/wp-content/uploads/2015/08/Leeprima-facie-notice1.pdf [Denied the request for compulsory license ]
  24. http://spicyip.com/2015/08/saxagliptin-cl-round-1-controller-shoots-down-lee-pharma.html [Denied the request for compulsory license ]
Award Winning Article Is Written By Shraddha Sharma

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