compulsory licensing of patents

Compulsory Licensing

Compulsory Licensing of Patents in India

What is Compulsory Licensing of Patents in India?

Patents in India are granted to encourage inventions and to secure that it is worked on a commercial scale. The Indian Patent Act ensures that a Patentee should not be able to enjoy a monopoly for the importation of the patented article.

The Patent Act provides measures by way of compulsory licensing (CL) to ensure that the patents do not impede the protection of public health and nutrition and the Patent Rights are not abused by the Patentee.

The CL therefore serves to strike balance between two disparate objectives- rewarding patentees for their invention and making the patented products, particularly pharmaceutical products, available to large population in developing and under developed countries at a cheaper and affordable price.

Grant of Compulsory License due to “Non-Working/Unaffordable Prices of Patented Article” (Section 84):

Section 84 of Indian Patent Act pertains to the grant of Compulsory Licences.

Compulsory Licences are granted in order to:

  1. Prevent the abuse of patent as a monopoly;
  2. Make a way for commercial exploitation of the patented invention by an interested person; and
  3. Address the public health concern in India.

Any person interested or already the holder of the licence under the patent can make request to the Controller for grant of Compulsory Licence on patent after three years from the “date of grant” of that patent, on the following grounds:

  1. reasonable requirements of public have not been satisfied; or
  2. patented invention is not available to the public at affordable price; or
  3. patented invention is not worked in the territory of India.

The Controller takes following aspects into consideration while granting Compulsory Licence:

  1. Nature of the invention, i.e complexity of the technology;
  2. Time which has elapsed since the grant of the patent i.e. despite of the best efforts by the patentee or licensee since the grant of patent, it was difficult to work out the invention at commercial scale to its fullest before the application of the compulsory licence was filed to the Patent Office;
  3. The measures already taken by the patentees or any licensee to make full use of the invention;
  4. Ability of the applicant to work the invention to the public advantage;
  5. Capacity of the applicant to undertake the risk in providing capital and working the invention, if application were granted;
  6. Applicant has made full efforts to obtain a licence from the patentee on reasonable terms and conditions and such efforts have not been successful within a reasonable period construed as a period not ordinarily exceeding a period of 6 months.

Grant of Compulsory License for the Export of Pharmaceutical Products:

Article 31(f) of the TRIPS agreement undermined the need for availability of medicines to the countries having less or no manufacturing capacity through importation from other countries. WTO adopted a mechanism to resolve this problem by implementing para 6 of the Doha Declaration on the TRIPS Agreement and Public Health on August 30, 2003.

Obligation under Art 31(f) of the TRIPS agreement was thus waived off in case of export of pharmaceutical product to the countries having least or no manufacturing capacity provided the eligible importing members has made a notification to the Council for TRIPS.

The Indian Patent Act was thus amended on January 1, 2005 and Section 92 (A) was incorporated for grant of CL for export of pharmaceutical products in certain exceptional circumstances.

The CL under the said section can only be granted if the importing country has also granted CL or has, by notification or otherwise, allowed importation of the patented pharmaceutical product from India. This condition is not applicable for least developing countries (LCD) having no patent regime. The LCDs is only required to notify the Council of WTO about their willingness to import the pharma product subject to para 6 of Doha Declaration.

India’s First Compulsory License of Patent:

On March 9, 2012, India’s first compulsory license (CL) was granted by the Patent Office to Natco Pharma Ltd. for producing generic version of Bayer Corporation’s patented medicine Nexavar, used in the treatment of Liver and Kidney cancer.

The Controller decided against Bayer on all the three grounds enlisted in the Patents Act for the grant of CL (reasonable requirements of the public not being satisfied; non-availability to the public at a reasonably affordable price, and the patented invention not being worked in the territory of India). While the multinational giant was selling the drug at INR 2.80 lakh for a month’s course, Natco promised to make available the same at a price of about 3 % (INR 8800) of what was charged by Bayer. Natco was directed to pay 6 percent of the net sales of the drug as royalty to Bayer. Among other important terms and condition of the non assignable, non exclusive license were directions to Natco to manufacture the patented drug only at their own manufacturing facility, selling the drug only within the Indian Territory and supplying the patented drug to at least 600 needy and deserving patients per year free of cost.

Aggrieved by the Controller’s decision, Bayer immediately moved to the Intellectual Property Appellate Board (IPAB) alleging that the grant of CL was illegal and unsustainable. The Board rejected Bayer’s appeal holding that if stay was granted, it would definitely jeopardize the interest of the public who need the drug at the later stage of the disease.It further held that the right of access to affordable medicine was as much a matter of right to dignity of the patients and to grant stay at this juncture would really affect them.

The Board’s chief Prabha Sridevan in an open court on March 4, 2013 dictated the order upholding the Controller’s decision for grant of compulsory license on Bayer’s patented drug, Sorafenib Tosylate.

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