Compulsory Licensing on Patented Drugs

Context: Talks about use of compulsory licensing provisions for manufacture of Pfizer COVID-19 vaccine recently granted approval by UK

  • Compulsory licensing is when a government allows someone else to produce a patented product or process without the consent of the patent owner or plans to use the patent-protected invention itself. It is one of the flexibilities in the field of patent protection included in the WTO’s agreement on intellectual property — the TRIPS (Trade-Related Aspects of Intellectual Property Rights) Agreement.


Meaning of Patent

  • The World Intellectual Property Organization (WIPO) defines a patent as an exclusive right granted for an invention, which is a product or a process that provides, in general, a new way of doing something, or offers a new technical solution to a problem.
  • A patentee shall have exclusive rights over his invention for a period of 20 years, and he can exclude others from making any use of his patented product.

What are Compulsory Licenses under the Patents Act?

  • Compulsory licenses are authorizations given to a third-party by the Controller General of Patents, Designs and Trade Marks (Department of Industrial Policy and Promotion, Ministry of Commerce & Industry) to make, use or sell a particular product or use a particular process that has been patented, without the need of the permission of the patent owner.
  • This concept is recognised at both national as well as international levels, with an express mention in both (Indian) Patent Act, 1970 and TRIPS Agreement.
  • Under the Doha Declaration on the TRIPS Agreement and Public Health, each member has the right to grant compulsory licenses and the freedom to determine the grounds upon which such licenses are granted.

Pre-requisite Conditions

  • Under the Indian Patent Act, any person, regardless of whether he is the holder of the license of that Patent, can make a request to the Controller for grant of compulsory license on expiry of three years, when any of the following conditions is fulfilled –
  1. The reasonable requirements of the public with respect to the patented invention have not been satisfied
  2. The patented invention is not available to the public at a reasonably affordable price
  3. The patented invention is not worked in the territory of India.
  • Further, compulsory licenses can also be issued suo motu by the Controller under section 92, pursuant to a notification issued by the Central Government if there is either a “national emergency” or “extreme urgency” or in cases of “public non-commercial use”.
  • Even after a compulsory license is granted to a third party, the patent owner still has rights over the patent, including a right to be paid for copies of the products made under the compulsory licence.
  • In certain cases recently, the Indian courts have ruled that the provision against anti-competitive practices in the competition act and the provision of compulsory licensing in the patent act are not in exclusion of each other; in fact, they have to be read conjunctly.
  • The question of whether a patentee had adopted anti-competitive practices could also be considered by the Controller.

Cases pertaining to grant of compulsory license

  • The grant of a patent implies a statutory monopoly on an invention and throws up the concern that it should not be exploited at the cost of public interest. So, anyone who has a patent licence over an invention is required to submit information related to the working of that patent annually to the patent office.
  • The purpose behind mandating this disclosure is to ensure that the public requirement is being consistently met with adequate quantity available to them.
  • Three years after a patent has been granted, the Patent Act allows the grant of a compulsory licence to any person.
  • The person who gets the compulsory licence can then produce the patented product without the owner’s consent, but it needs to be demonstrated that the patent holder had declined the request to voluntarily provide the licence.
  • India’s first ever and the only compulsory license was granted by the Patent Office in March 2012, to Natco Pharma for the generic production of Bayer Corporation’s Nexavar, a life-saving medicine used for treating Liver and Kidney Cancer. 

The Indian Patents Act, 1970

Inventions that are not patentable (only exam relevant)

  • An invention the primary or intended use or commercial exploitation of which could be contrary public order or morality or which causes serious prejudice to human, animal or plant life or health or to the environment;
  1. The mere discovery of a scientific principle or the formulation of an abstract theory or discovery of any living thing or non-living substance occurring in nature;
  2. The mere discovery of a new form of a known substance which does not result in the enhancement of the known efficacy of that substance or the mere discovery of any new property or new use for a known substance;
  3. A method of agriculture or horticulture;
  4. Plants and animals in whole or any part thereof other than micro-organisms but including seeds, varieties and species;
  5. Biological processes for production or propagation of plants and animals;
  6. A mathematical or business method or a computer programme per se or algorithms;
  7. A literary, dramatic, musical or artistic work or cinematographic works and television productions;
  8. A mere scheme or rule or method of performing mental act or method of playing the game;
  9. Topography of integrated circuits;
  10. An invention which in effect, is traditional knowledge;
  11. Inventions relating to atomic energy.

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