To avoid hitches in the future, and to ensure the interest of the public first, the Government of India has included the provision of, “Compulsory licensing” in the Patent Act 1970. Compulsory licenses can be found under the Indian Patent Act, 1970 (Indian Patent Act), Chapter XVI, read with Indian Patent Rules, 2003 (Indian Patent Rules). The said regulations impose a duty on the patentee to manufacture the patented product in India and provide the services or products at reasonable prices to the public of India.
What are the requirements for obtaining a compulsory license?
The compulsory license is granted after the expiration of the three years to make sure that the public interest is not exploited. To do that three following thresholds are measured as per sec 84(1) of the Indian Patent Act 1970:
The Public of India heavily needs the service or product, which is the result of the patent.
The service or product is not available at an affordable price.
The manufacturing or process of the product patented is not done in India.
Sec84(4) further gives power to the controller office to decide if the patentee has reasonable requirements of the public with respect to the patented invention have not been satisfied or that the patented invention not worked in the territory of India or that the patented invention is not available to the public at a reasonably affordable price, may grant a licence upon such terms as he may deem fit
Under 84(5) the controller has the power to ask the patentee to issue licenses to companies, organisations or individuals, he deems fit. But, sec 84(6)has laid down further conditions before granting anyone the Compulsory License:
(i) the nature of the invention, the time which has elapsed since the sealing of the patent and the measures already taken by the patentee or any licensee to make full use of the invention;
(ii) the ability of the applicant to work the invention to the public advantage;
(iii) the capacity of the applicant to undertake the risk in providing capital and working on the invention, if the application were granted;
(iv) as to whether the applicant has made efforts to obtain a licence from the patentee on reasonable terms and conditions and such efforts have not been successful within a reasonable period as the Controller may deem fit: Provided that this clause shall not be applicable in case of national emergency or other circumstances of extreme urgency or in case of public non-commercial use or on establishment of a ground of anticompetitive practices adopted by the patentee, but shall not be required to take into account matters subsequent to the making of the application.
Explanation.—For the purposes of clause (iv), "reasonable period" shall be construed as a period not ordinarily exceeding six months
Sec 84 (7) of the Indian Patent Act further defines the reasonable requirements of the public, and how not meeting them via patentee, attracts the obligations under the compulsory license. Sec 84(7) says:
— (a) if, by reason of the refusal of the patentee to grant a licence or licences on reasonable terms,—
(i) an existing trade or industry or the development thereof or the establishment of any new trade or industry in India or the trade or industry of any person or class of persons trading or manufacturing in India is prejudiced; or
(ii) the demand for the patented article has not been met to an adequate extent or on reasonable terms; or
(iii) a market for export of the patented article manufactured in India is not being supplied or developed; or
(iv) the establishment or development of commercial activities in India is prejudiced; or
(b) if, by reason of conditions imposed by the patentee upon the grant of licences under the patent or upon the purchase, hire or use of the patented article or process, the manufacture, use or sale of materials not protected by the patent, or the establishment or development of any trade or industry in India, is prejudiced; or
(c) if the patentee imposes a condition upon the grant of licences under the patent to provide exclusive grant back, prevention to challenges to the validity of patent or coercive package licensing; or
(d) if the patented invention is not being worked in the territory of India on a commercial scale to an adequate extent or is not being so worked to the fullest extent that is reasonably practicable; or
(e) if the working of the patented invention in the territory of India on a commercial scale is being prevented or hindered by the importation from abroad of the patented article by—
(i) the patentee or persons claiming under him or
(ii) persons directly or indirectly purchasing from him; or
(iii) other persons against whom the patentee is not taking or has not taken proceedings for infringement.
Section 146 (2) of the Indian Patent Act requires every patentee and licensee to provide information related to their patent via Form 27, every year. Form 27 includes the following information:
1. Whether or not the patented article has been worked. In case it has not worked, what are the reasons behind the failure?
2. Value of the patented product;
3. Details regarding the manufacturing locations; Whether or not it is possible to manufacture it in India
4. List of licenses and sub-licenses granted during the year;
5. Whether the reasonable requirement of the public has been met or not.
Note: In case the patentee fails to depose the mentioned information, it will be assumed that the patented invention is not working. The controller office can impose a fine on the patentee of up to 10 lakh and imprisonment of up to six months.
Apart from the technical grounds to impose compulsory license for a patent, the government can sumo moto compulsory license in sec 92(1) of Indian Patent Act:
(i) a circumstance of national emergency; or
(ii) a circumstance of extreme urgency; or
(iii) a case of public non-commercial use,
To make sure that the patents are used to serve a bigger purpose as mentioned in paragraph 6 of the Doha Declaration, India inserted a new provision, “sec 92-A”. Under this section, it is provided that a compulsory license under the TRIPS agreement will be given for pharmaceutical products to other WTO countries and entities if the product can address the health issue of the public at large.
Sec 92A says, “Compulsory licence 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 licence has been granted by such country or such country has, by notification or otherwise, allowed the importation of the patented pharmaceutical products from India.”
In the case law, Garware Wall Ropes Ltd. Vs. A.I. Chopra and Konkan Railway Corp, the Bombay High Court allowed third parties to use the patented articles to manufacture the products on behalf of the Government to serve the public at large.
Sec 100 and 102, allow the government of India, to obtain the patent and license it further to third parties, and pay the royalties to the patentee.
What is the procedure for granting a compulsory license?
Step 1: Go to your browser, and open this link. Or go to the Indian Patent Office, and file Form 17.
Step 2: Following the procedure provided under section 87 of the Indian Patent Act, Controller will analyse the application, and cross-check the provided information. Controller analyses:
the nature of the invention
applicant’s ability to work on the invention in India
Whether the applicant tried to get the license via patentee
While applying for the license, the applicant took a minimum 6 months
Step 3: When the controller is unsatisfied with the Form 17, the applicant will be served a notice. The applicant has to respond to the notice within the next 30 days.
Step 4: The controller will hear the matter in the quasi-judicial trial. Depending on the trial, a compulsory license will be granted or not.
Note: When the matter is decided in the favour of the applicant, a Compulsory license will be granted based on certain terms and conditions, also the royalties to be paid to the patentee will be decided.
How to oppose the grant of compulsory licenses?
Step 1: The assignment of the Compulsory license will be published under the official journal of the Indian Patent Office.
Step 2: From the date of publishing, the patentee or any other interested party will have 60 days to file Form 14 and register their opposition.
Step 3: The controller will intimate the applicant and the patentee for the hearing.
Step 4: As per the hearing the matter will be decided.
How to terminate a compulsory license?
To terminate the compulsory license, Form 21 is required to be filled.
Case laws:
BDR Pharmaceuticals v. Bristol-Myers Squibb
BDR sought a compulsory license for Sprycel® which is used in cancer treatment. The controller rejected the application on the grounds that the BDR did not go to the patentee and followed the regular process of procuring the license.
Lee Pharma v. AstraZeneca
Lee Pharma sought Saxagliptin® which is used in the treatment of Type-II Diabetes Mellitus. However, the controller rejected the application on the following grounds:
Reasonable requirement of the public
Not available at a reasonable price
Patent not working in the territory of India
Reference:
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