06/13/2024

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Compulsory licensing in IPR

Compulsory licensing in IPR

This article is written by Monesh Mehndiratta. The present article explains the concept of compulsory licensing, its use in the field of intellectual property rights, especially in patents and copyrights, the global perspective on compulsory licensing, the procedure for the grant of a compulsory licence under the Patents Act, 1970, and the Copyrights Act, 1957, the objective of compulsory licensing, its impact, and the first case where the licence was granted. 

Introduction

Can you imagine some other person using and manufacturing your product without your permission? 

Do you think it is possible?

Well, yes, it is possible. 

Even if your product is patented, another person can manufacture, use, and sell your product without your authorization. That can be done with the help of compulsory licensing. You would be familiar with the term ‘licence’ but must be wondering what is ‘compulsory licensing’? Has anyone ever been given such a licence? What is the use of a compulsory licence? All these questions must be bothering you. Well, do not worry, the present article will answer all your questions. 

The present article deals with the concept of compulsory licensing, its meaning, the procedure for the grant of a licence under the Patents Act, 1970, the conditions to be fulfilled, the impact of compulsory licensing and the global perspective on the same. It further discusses the first case where a compulsory licence was granted in India. The article also explains provisions related to compulsory licensing in the Copyrights Act, 1957. 

Meaning of compulsory licence

Compulsory licensing is a concept that enables a third party to manufacture a patented product in certain exceptional circumstances. However, only people who have been granted the compulsory licence by the controller, can do so. A compulsory licence is granted by the controller upon an application made by a person seeking the licence and upon satisfaction of certain conditions and reasons for the grant of the licence. 

The concept has been introduced for the benefit of the public at large so that patented products can be made available to the public at affordable prices. We all know that intellectual property does not only consist of patents but also includes copyright, trademarks, trade secrets, etc. people might think that compulsory licences are only used in patents. However, this is not the case. The concept of compulsory licence is mainly concerned with patents, but its scope is not limited to just patents but extends to copyrights as well.

During the COVID-19 pandemic, the concept of compulsory licensing was the talk of the town. This was a period where people realised the importance of health and the need to regulate the patent system and impact of intellectual property rights. Even the world’s largest economies and developed countries faced the problem of unavailability of essential medicines. People could not afford the life-saving medicines due to high prices and costs of manufacturing. Underdeveloped companies with limited resources could neither manufacture the required medicines nor buy it due to financial burden. This is because pharmaceutical companies seek patent protection which gives them exclusive rights to manufacture, sell and distribute their products as a result of which a monopoly is created in the market leading to high costs of products. If a third person or manufacturer tries to manufacture the patented products, they can seek compensation and file a suit for injunction. This is where the concept of compulsory licensing comes into picture whereby a third party is granted a licence by the concerned authority, to manufacture, sell and distribute the patented product without permission of the patentee. This is the reason why the government and manufacturers relied on the option of compulsory licence during the health crises in the period of pandemic.  

Origin of compulsory licensing

Compulsory licence can be understood as a licence granted by the government or an authorised agency in an intellectual property, particularly copyright or patents, to a third party without the consent of the owner or creator for better utilisation and affordability of such products. The history of compulsory licence can be traced back to the Statute of Monopolies, 1624 in the United Kingdom, which prevented monopolies in patents. The concept further gained popularity during anti-patent movements in the country. These movements aimed at reducing the impact of patents because of which people in need were not able to access and reap the benefits of patented products and inventions. 

Also, the giant companies would seek the patent protection making it difficult for the small-scale industries and manufacturers to sustain in the market. The Patents Act, 1883 mentioned the concept in the form of rules to prevent the non-working of patents. The concept gained worldwide attention when it was mentioned in Article 5A of the Paris Convention enabling the member states to take legislative measures in order to grant compulsory licensing.

TRIPS and compulsory licensing

The concept of compulsory licensing is also mentioned in the Trade Related Intellectual Property Rights (TRIPS) Agreement under Article 31 wherein the member states were allowed to use the patented product or its subject matter without permission or authorisation from the patentee in exceptional circumstances. This use also includes the use of subject matter of a patent by the government or third parties. Later, the Doha Declaration reaffirmed the TRIPS Agreement and enabled the member states to determine grounds for the grant of compulsory licensing. After signing the TRIPS agreement, it became mandatory for the member countries to make provisions for compulsory licensing in their laws. 

Under the scheme of compulsory licensing, all the members of the World Trade Organisation (WTO) can export medicines. The agreement and the annexures annexed therein also provide that the mechanism of compulsory licensing can be applied to pharmaceutical products like medicines, vaccines and diagnostics required in situations of epidemic or health crisis. It can be said that the TRIPS agreement has created a foundation or base for compulsory licence but the practical aspect is dependent on the members taking necessary steps to implement the concept with the help of laws and policies. India has already introduced provisions related to compulsory licensing in its IPR regime. 

Licence under Patents Act, 1970

A licence can be understood as a permission given by the owner of a thing to a person to use, make, or exercise certain rights with respect to the subject matter. Thus, in patents, it means a permission to make, use, or exercise rights related to any invention that is patented. A licence only grants or permits partial use of a product or invention; however, the ownership remains with the patentee. It can either be exclusive or non-exclusive, which depends on the degree and extent of the right. 

Types of licence

Licence can further be divided into two categories:

  • Voluntary licence 
  • Compulsory licence 

Voluntary licence

A voluntary licence is a written permission or authority given by the patentee or owner of the patented invention to any other person to make, use, sell, etc., the patented product in such a manner and on terms and conditions provided in the licence. This kind of licence is given by the owner or patentee directly. There is no role of the controller or government in granting the licence in any manner. Thus, it is known as a voluntary licence. 

Compulsory licence

It is a licence through which a third person is authorised by the government or controller to make, sell or use a patented product or patented process. In simple terms, compulsory licences are authorisations given to a third-party by the government to make, use, or sell a particular product or use a particular process which has been patented without the need of the permission of the patent owner. The provisions regarding compulsory licences are given in the Indian Patents Act, 1970 and in the TRIPS Agreement at the international level. There are certain pre-requisite which need to be fulfilled if the government wants to grant a compulsory licence in favour of someone. A compulsory licence is granted by the Controller and is specifically dealt with under Chapter XVI, Section 84–94 of the Patents Act, 1970. 

Purpose of granting compulsory licence

Section 89 provides that the purpose of granting a compulsory licence is:

  • To get the patented invention to work commercially in the country without any undue delay to the fullest extent to be called as a reasonable practice.
  • To prevent unfair prejudice with respect to the interests of any person who is working or developing an invention in India and is protected by a patent. 

Compulsory licence under the Patents Act, 1970

Grounds for compulsory licence 

Section 84 of the Act deals with compulsory licences. According to the Section, any person interested can make an application to the Controller for the grant of a compulsory licence after expiry of 3 years from the time when the patent was granted. Application for grant of compulsory licence can be made on the following grounds:

  • Requirements of the public are not satisfied with respect to patented inventions.
  • The patented invention is not available at affordable prices to the public.
  • The invention is not working in the country. 

Any person can make an application under this Section, irrespective of the fact that he is a holder of a licence and alleges the above-mentioned grounds in the application. The application will also contain a statement stating the nature of interest of applicants and other particulars as prescribed. If the controller is satisfied with the above-mentioned grounds,  he/she may grant a licence with the necessary terms. While considering the application, the controller must consider (Section 84(6)):

  • Nature of invention, time elapsed since the sealing of patent, and measures taken by patentee or licensee to use the invention.
  • Ability of the applicant to use an invention for the benefit of the public.
  • Capacity to undertake risk if the application is granted. 
  • Efforts made by the applicant to obtain a licence from the patentee and such efforts have been successful. 

Section 84(7) provides that reasonable requirements of the public will not be considered as satisfied if:

  • Due to the refusal to grant a licence by patentee –
    • A trade or industry already existing or the establishment of new trade or industry in India is prejudiced.
    • There is not much demand for the patented product. 
    • There is prejudice with respect to the establishment or development of commercial activities in the country.
    • There is no supply or development of the market for the export of patented products. 
  • There is prejudice with respect to the use of patented products or processes, the manufacture, use, or sale of materials that are not protected, or the establishment of any trade or industry due to conditions imposed by the patentee on the grant of a licence.
  • The patentee imposed a condition to provide an exclusive grant back and to prevent challenges to the validity of the patent or licensing of coercive packaging.
  • The invention is not commercially used in India to an adequate extent or fullest extent, which can be considered as a reasonable practice. 
  • The commercial use of patented invention is prevented or obstructed by importation of the patented product from any foreign country by:
    • Patentee or any person claiming under him.
    • Persons who are purchasing the product from the patentee directly or indirectly.
    • Any other person against whom no proceedings for infringement have been initiated by the patentee. 

Procedure for the grant of compulsory licence 

Section 87 of the Act provides the procedure for the grant of compulsory licences. The licence is granted by the controller under the Act. The section provides that when an application for compulsory licensing is made and the controller is satisfied with the grounds, the applicant will be asked to serve a notice to the patentee or any other person interested in the patent. The application will then be published in the official journal. 

In case of any objection, the patentee or any other interested person may give the notice of such opposition or objection to the controller within the time prescribed by the controller. The notice of opposition must contain the grounds of objection with respect to the application made by the applicant for grant of a compulsory licence. The controller is under an obligation to notify the applicant about such opposition and is given an opportunity to be heard by both the parties i.e., the applicant and the opponent, before deciding the application. 

Revocation of patents

Section 85 of the Act deals with the revocation of patents by the controller due to non-working. Any person interested or the central government makes an application to the controller to revoke the patent, after the expiration of 2 years from the date when the first compulsory licence was granted, on the following grounds:

  • The patented invention is not worked on or used in the country.
  • Requirements of the public are not satisfied with respect to the patented invention.
  • It is not available to the public at a reasonable and affordable price. 

The application must also contain other particulars as prescribed and the nature of interest of applicants if made by any person other than the Central Government. If the controller is satisfied with the above-mentioned grounds, he may grant the order to revoke the patent. The section also provides that every application made in this regard must be decided within one year from the date when it is presented before the Controller. 

Termination of compulsory licences

Section 94 of the Act deals with termination of compulsory licences, which can be done on an application made in this regard and upon the satisfaction of the controller that the circumstances giving rise to a compulsory licence do not exist any more. The Section provides that such an application for termination can be made by:

  • The patentee or
  • Any person deriving title or interest in the patent for which compulsory licence was granted. 

However, if such an application is made by any other person, an objection can be raised by the holder of the licence. While granting the application, the controller has to consider whether the interest of the person having the licence is affected or not. 

Powers of controller

Section 88 of the Act deals with the powers of the controller to grant compulsory licences. It provides that the controller can:

  • Order the grant of licences to the customers of the applicant where an application has been made stating that there is prejudice regarding manufacture, use, or sale of materials that are not protected by patent due to conditions imposed by the patentee or upon purchase, hire, or use of such a product or process.
  • Order to amend the existing licence where an application is made by a person holding a licence under the patent. 
  • If more than two patents are held by the same patentee and an applicant making an application for compulsory licence establishes that the requirements of the public that are reasonable have not been satisfied, the controller may direct to grant the licence of other patents if he is satisfied that –
    • The applicant cannot work efficiently without infringement of any other patent and
    • The patents involve technical advancements that are important or
    • Economic significance with respect to other patents. 
  • The section also provides that a licensee can make an application to the controller to revise terms and conditions on the ground that the settled terms and conditions have proved to be onerous and that the licensee is not able to work the invention and is suffering a loss. This application is made after the licensee has worked or commercially used the invention for not less than 12 months.  

Section 86 of the Act provides the power of Controller to adjourn the hearing of applications for a period not exceeding 12 months in cases where the application states that:

  • The invention patented has not been worked on in India,
  • Controller is satisfied that the time has elapsed since the patent was sealed for any reason due to which the invention was not worked on a commercial scale to such an extent which can be called a reasonable practice. 

However, if it is established by the patentee that the invention was not worked on due to any state or central act, rule or regulations made by the government, the period of adjournment will be reckoned in this case from the date during which the working of the invention was prevented. 

Terms and conditions of compulsory licences

Section 90 of the Act deals with the terms and conditions of compulsory licences and provides that while settling the terms and conditions, the controller must try to secure:

  • Reasonable royalty and remuneration are reserved for the patentee or any other reasonable beneficiary of the patent with respect to the nature of the invention, and expenditure incurred by the patentee in developing and obtaining the patent.
  • Working on patented inventions to the fullest extent, along with profit.
  • Availability of patented products to the public at affordable costs. 
  • Grant of non-exclusive licence.
  • Non-assignable right of the licensee. 
  • Grant of licence for a balance term unless a shorter term is consistent with the interests of the public.
  • Licence is granted mainly to supply in the Indian market.
  • The purpose of granting a licence in case of semiconductor technology is to work/use the invention for non-commercial use by the public.
  • A permit for exportation of patented products under the licence is granted in order to remedy an anti-competitive practice. 

The Section also provides that no licence would authorise the licensee to import any patented article or product made by a patented process from a foreign country where it would result in infringement of patentee’s rights. 

Compulsory licence for export of patented pharmaceutical products

Section 92 of the Act provides special provisions for compulsory licences as notified by the Central Government. It provides that the Central Government can make a declaration through a notification regarding the grant of a compulsory licence for any patent in cases of:

  • National emergency,
  • Extreme urgency,
  • Non-commercial use by the public. 

The Controller will grant the licence to the application upon an application made by him and also settle terms and conditions. While doing so, the Controller will have to make sure that the patented product is available to the public at the lowest prices and also that the patentees are able to take reasonable advantage of their rights. However, the Controller will not apply the procedure given under Section 87 of the Act, in cases where a national emergency or extreme urgency, or non-commercial use by the public arises. This also includes crises related to public health, such as AIDS, HIV, tuberculosis, malaria or other epidemics. 

Section 92A further deals with the compulsory licence for the export of pharmaceutical products that are patented. It provides that in order to address problems of public health in countries where there is no manufacturing capacity or insufficient manufacturing capacity of pharmaceutical products, a compulsory licence will be available for the export and manufacture of such products to such countries and will be granted by the controller upon an application made in this regard. The pharmaceutical products in this situation include any patented product or products manufactured by a patented process required to address the public health crisis. 

Compulsory licence under the Copyrights Act, 1957

Chapter VI, Section 31-31B of the Copyrights Act, 1957 deals with compulsory licences. Section 31 provides that a compulsory licence can be granted by the Registrar of Copyrights under the directions of the commercial court, if there is a complaint regarding any work which is published or performed in public, during the term of the copyright, stating that:

  • The owner refused to republish the work or allow the same, or refused to allow the performance of such work in public because of which it was withheld from the public.
  • The owner refused to broadcast the work or communicate it to the public. 

The commercial court, upon satisfaction that there is no reasonable cause for such refusal, can direct the Registrar of Copyrights to grant the licence to the complainant after giving an opportunity to be heard to the owner of the copyright. The licence will allow the complainant to:

  • Republish the work,
  • Perform the work in public,
  • Communicate the work by broadcasting it. 

However, the owner must be given compensation for the same, and the complainant has to abide by the terms and conditions imposed by the registrar in order to exercise the rights mentioned above. 

It is interesting to note the term ‘commercial court’ in the above section has been inserted recently. The Tribunal Reforms (Rationalisation and Conditions of Service) Ordinance, 2021 which came into force on 5 April, 2021 abolished various tribunals under different statutes including Intellectual Property Appellate Board (IPAB) as a result of which an amendment was done in the Copyrights Act, 1957 to omit the term ‘Appellate board’ and to insert the term ‘commercial court’.  

Section 31A further deals with compulsory licences in cases of unpublished or published work. If the author of any unpublished work or published work, or work withheld from the public in India, is dead or unknown, or cannot be found along with the owner, any person can apply for a grant of licence to the Commercial Court to publish or communicate such work. However, before making any such application, the applicant is supposed to publish the proposal in one issue of a daily newspaper circulated in major parts of the country in English language. If the work includes translation, then in the daily newspaper of that language.

The application must be accompanied by the advertisement and the prescribed fee. The commercial court, after an inquiry, will direct the registrar of copyrights to grant a licence. After doing so, the registrar will ask the applicant to deposit the royalty, which is determined by the Commercial Court in the public account or any other account specified by the court. The Section further provides that if the original author of the work is dead, the Central Government may ask the heirs, executors, or legal representatives of the author to publish the work within a given time period, if it is beneficial for the national interest. If the work is not published within the prescribed time limit, the central government may permit any person to publish the work upon application made by the person in this regard. This will be done after giving the parties an opportunity to be heard and upon payment of royalty by the applicant. 

Section 31B further provides provision for the grant of compulsory licences for the benefit of disabled persons. A person working for the benefit of any person with a disability in a business or for profit may apply for a compulsory licence to the Commercial Court. Such an application will be disposed of by the court within 2 months from the date when such application was made. While doing so, the court will inquire or direct an inquiry in order to establish the credentials of the applicant to satisfy itself as to whether the application was made in good faith or not. The Court will direct the Registrar to grant a licence to the applicant in order to make the work available to persons with disabilities. The Court can also extend the period of compulsory licence. All the compulsory licences issued under this Section will specifically provide:

  • Means of publication,
  • Format of publication,
  • Period or time limit to exercise the licence,
  • Number of copies to be issued,
  • Rate or royalty. 

Impact of compulsory licence

A compulsory licence has the following effects:

Innovation 

Underdeveloped countries mostly prefer getting the compulsory licence for a generic drug rather than funding the research & development separately, which is often a very costly thing. Moreover, research-based pharmaceutical companies do not launch patent modules in the developing countries as there is always the risk of losing the patent, and losing money in research. However, with the introduction of compulsory licence, the scope of innovation has increased. The developing countries and underdeveloped countries have realised the importance of innovation and are striving to achieve it in order to sustain in the market which is also beneficial for their economy. 

Competition and cost

Compulsory licensing will increase the number of companies producing generic medicines. Hence, there will be an increase in the supply leading to lower product cost. This will also force the innovator countries to introduce differential pricing for their patent modules so that they can stand on the market. However, it will increase the competition among the suppliers and manufacturers. 

Access to patented invention 

With the help of a compulsory licence, a patented invention can be accessed easily without the consent of the patentee or the owner of the invention. This further results in the availability of patented processes and products to a larger public. 

Transfer of technology or patented product 

The compulsory licensing has enabled the transfer of a patented product to any foreign country having no resources or capacity to manufacture the said product. For example, Section 92A of the Patents Act, 1970 provides for the export of patented pharmaceutical products to countries which are in need and have no capacity to manufacture the product. 

Public interest 

The concept of compulsory licensing works in favour of public interest and enables a patented product to be available at an affordable price to the public. It also helps in balancing intellectual property rights and public interest like public health, development, etc. This also leads to controversy between the exclusive rights of patentees over intellectual property and promoting access to patented products. 

First case of compulsory licensing in India

India granted its first ever compulsory licence during the dispute between Bayer Corporation and NATCO Pharma Ltd., in 2012 to an Indian Company named Natco Pharma. Let us try to understand this case.

NATCO-BAYER Case 

India granted its first ever compulsory licence during the dispute between Bayer Corporation and NATCO Pharma Ltd., in 2012 to an Indian company named Natco Pharma.  In this case, Bayer Corporation, a German pharmaceutical company, invented a drug named ‘Nexavar’ for the treatment of kidney cancer. This drug was granted patent protection in India in 2008. Thereafter, an Indian pharmaceutical company approached Bayer Corporation with an aim to seek a voluntary licence to manufacture the drug in 2010. However, their request was denied due to which they applied to the Controller for a grant of compulsory licence. The licence was granted in 2012, aggrieved by which the Bayer Corporation approached the Intellectual Property Appellate Board (IPAB). The decision of the board was similar to that of the Controller. The board also opined that since the patentee is enjoying the rights conferred upon it, the patentee must also ensure that the drug is available to the public at large. Further, in this case, all the three conditions mentioned in Section 84 were fulfilled.

This medicine is used 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 for around Rs 9000, making this potentially life-saving drug easily accessible to all parts of society and not just the rich people. This decision benefited the general public at large. However, it was criticised by the pharmaceutical companies, as they felt the licence should not have been given due to fear of losing their rights over their patented products and inventions. 

However, Natco Pharma is paying the royalties to Bayer at a rate of 6% of all sales on a quarterly basis in accordance with the guidelines set by the United Nations Development Programme (UNDP). In January 2013, the Health Ministry of India recommended three anti-cancer drugs trastuzumab, ixabepilone, and dasatinib for compulsory licences. This will allow the Government to sell these drugs at a significantly lower price and will also allow the people who cannot afford the drugs originally, access to these drugs.

Lee Pharma v. Astrazeneca (2015)

The Lee Pharma v. Astrazeneca (2015), is another case where a compulsory licence was sought wherein, an Indian Pharmaceutical manufacturer sought compulsory licence for a drug named ‘sexagliptin’ that is used for the treatment of type-II diabetics. It is amongst the very few medicines available for the treatment of type-II diabetics in the country. The drug was first given to Bristol Myers Squibb and later to Astrazeneca, an Anglo Swedish Company. However, the application for the grant of compulsory licence was rejected on the ground that the conditions or reasons mentioned in Section 84 of the Act were not fulfilled. 

Compulsory licence in different countries

The concept of compulsory licence is not limited to India, but has worldwide application, from underdeveloped countries to developing and developed countries. Let us try to understand the provisions of compulsory licensing and its related provisions in major developed countries like the UK and the US. 

Compulsory licence in the United Kingdom 

As stated above, the origin of compulsory licensing lies in the United Kingdom, as stated in the Statute of Monopolies of 1623. Currently, the Patents Act of 1977 deals with compulsory licences in the United Kingdom. It provides that an application to obtain a compulsory licence can be made after 3 years from the grant of the patent on the condition that the demand for such a patented product:

  • Cannot be met on terms that are reasonable.
  • The refusal is prejudicial to the development or establishment of commercial activities. 

The Act also provides for dependent patents. It provides that if in case there is any technical advancement in a patented product or invention which is considered important for economic significance, but the usage is obstructed by the previous patentee, then the owner of the patent which is dependent on previous patents i.e., dependent patent, can seek compulsory licence on such a patent. The original patentee, on the other hand, will be given cross-licence on the subject matter. 

Compulsory licence in the USA

The US laws do not provide any specific provision for compulsory licensing. However, in cases of medical emergencies and to enable the public to reap the benefits of pharmaceutical products, the government has devised certain remedies. The Bayh-Dole Act, 1980 gives rights to the government in the US to have a non-transferable, non-exclusive, irrevocable paid-up licence to practise any invention throughout the world in order to promote and utilise technology funded by the government according to the  35 US Code, Section 202(c)(4). It also provides that an owner of an invention made with the help of government funds, may licence the same to any third party for the sake of health and safety as given under 35 US Code, Section 203(a). 

The government also has a right to use or manufacture patented products without the permission of the owner or patentee, as given under 28 US Code, Section 1498. However, the patentee can ask for compensation for the use and manufacturing of a patented product or invention. Thus, the US does neither expressly recognise the concept of compulsory licensing nor provides any specific provision for the same. However, policies and laws have been made to regulate the prices of patented products, especially products related to the pharmaceutical industry. 

Compulsory licence in India

In earlier times, inventions and their techniques were kept secret due to apprehension of theft. The inventors had no remedies in case their inventions were stolen or exploited. Thus, there was a need to protect the rights of inventors and their inventions. The protection for inventions i.e., the patent system in India emerged during the British rule and the first legislation in this regard was based on the British Patent Law of 1852, which was modified and amended in 1859. Thereafter, the Patent and Designs Act, 1911 was enacted and used until the 1970 Act was passed. However, the concept of a compulsory licence was not introduced until then. 

A committee headed by Justice N. Rajagopala Ayyangar was appointed by the government in 1957, to examine the existing law on patents in India and recommend necessary changes and suggestions. A report was submitted in 1959, based on which a bill was introduced in 1965. Finally, the Patents Act, 1970 was enacted and passed by both houses on 19th September, 1970, but did not have any provisions related to a compulsory licence. The Act was later amended in 1999 after the establishment of the World Trade Organisation in 1995 by the Patent (Amendment) Act, 1999. The Patent (Amendment) Act, 2002 provided a uniform term of 20 years for patent protection. Other significant changes were made to the Act in 2005 in order to comply with the TRIPS agreement, and finally, specific provisions related to grant, revocation and termination of the compulsory licence were added under Chapter XVI of the Act.  The concept of compulsory licence, however, is not limited to patents in India but extends to copyrights as well. The Copyright Act, 1957 also contains provisions related to compulsory licensing for the copyrighted works under Chapter VI of the Act. 

Different views on compulsory licensing

The introduction and implementation of provisions related to compulsory licensing is a noble step taken for the benefit of the public at large. With this, the patented products can be easily made available to the public at cheap and affordable prices so that they can reap the benefits of such inventions and products. However, there are different views with respect to the concept and implementation of provisions for the grant of compulsory licensing. 

Under-developed and developing nations find it a beneficial measure due to the unavailability and higher costs of patented products and the limited resources and capability to manufacture and produce such products. With the help of compulsory licensing, patented products can be easily imported and exported, manufactured by any third party who has been granted the licence, making such products easily available to the public at large at affordable prices. 

The developed countries, on the other hand, criticise the concept of compulsory licensing as it limits the patentees and owners of patented products and inventions from exercising and enjoying their exclusive rights. For them, a compulsory licence is a threat to their exclusive rights to their patented products, because of which people hesitate and are reluctant towards innovating new products and inventions. 

Thus, this phenomenon of compulsory licensing is a highly debatable issue. Many developing countries are giving importance to compulsory licensing because of the unavailability and unaffordability of the medicines, and they are continuously granting more and more compulsory licences. The developed countries of Europe, the USA are opposing this view, as it would make innovation difficult for pharmaceutical companies. 

Conclusion 

Compulsory licence was introduced with an aim to provide certain benefits to the public at large and controlling the monopolistic rights enjoyed by the patentees and owners of the patented inventions and products. This is because, due to their monopolistic control over the patented product, the public was not able to take advantage of such a product. Even though patentees had a duty to make the patented product available to the public at affordable prices, the products were not easily available. This caused serious problems, especially in cases of pharmaceutical drugs and products necessary for the treatment of diseases. Thus, the government felt a need to introduce a mechanism to prevent such incidents and came up with the concept of a compulsory licence that enables a third party to use, sell, or manufacture patented products without the consent or permission of the patentee upon the grant of a licence. However, certain conditions must be fulfilled for the grant of a licence. 

The importance of a compulsory licence can also be understood in light of COVID-19 pandemic. The deadly coronavirus had no remedy or vaccination, because of which thousands of people died, and there was constant fear around the globe. Every country tried to find the vaccination for the same. When the vaccination was found, another challenge was its mass production at the same time so that the public at large could be benefited. One who invented the drug or vaccination would surely apply to seek the protection of a patent. In this situation, a compulsory licence is a possible solution, enabling the licensed manufacturers to produce the drug/vaccine doses in large quantities. Thus, compulsory licensing is the future, and the best possible solution is such circumstances.  

Frequently Asked Questions (FAQs)

Does compulsory licensing grant exclusive rights to a patented product?

No, compulsory licensing grants non-exclusive rights to a third party to use, manufacture, or sell a patented product. The exclusive rights remain with the patent holder or the owner of the patented product. 

Does granting a compulsory licence require the consent of the patentee?

No, a compulsory licence is granted by a competent authority, i.e., the Controller and does not require any consent or permission from the patentee. 

Can a compulsory licence be granted for a copyright?

Yes, Section 31-31B of the Copyrights Act, 1957, deals with compulsory licence in the case of copyrighted works. These provide for:

  • Section 31 provides for compulsory licence in cases of work withheld from the public.
  • Section 31A deals with the grant of compulsory licences in cases of published and unpublished works.
  • Section 31B deals with compulsory licences granted for the benefit of disabled persons. 

Can a compulsory licence be granted for trademarks?

No, there is no provision for the grant of compulsory licences in the case of trademarks. 

References

  • https://www.scconline.com/blog/post/2021/06/23/covid-19-vaccine/ 
  • https://www.scconline.com/blog/post/2019/09/03/pharmaceutical-patents-and-healthcare-a-legal-conundrum/ 
  • https://www.scconline.com/blog/post/2023/04/29/deblocking-provisions-a-key-to-unlocking-patent-potential/ 
  • https://articles.manupatra.com/article-details/Compulsory-License-The-Exception-to-the-Patent-Rights 

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