Introduction
In the complex world of intellectual property, Compulsory Licensing stands as a critical legal provision that balances patent holder rights with public welfare. It permits the government or a third party to use a patented invention without the consent of the patent holder under specific conditions.
With over a decade of experience, RegistrationMART has supported numerous clients—pharmaceutical companies, startups, public institutions, and legal professionals—in understanding and navigating the nuances of compulsory licensing in India.
This article delves into the legal basis, application process, landmark cases, and implications of compulsory licensing, especially within the Indian pharmaceutical and technology sectors.
What is Compulsory Licensing?
Compulsory Licensing (CL) is an authorization granted by a government to use, produce, or sell a patented product without the consent of the patent owner.
Objective:
To ensure affordable access to essential products—especially medicines—while maintaining a fair incentive for innovation.
Legal Basis in India
India’s Patents Act, 1970, under Sections 84 to 92, governs the issuance of compulsory licenses.
Section 84: General Grounds for Grant
After 3 years from the date of grant of the patent, any person may apply for a CL on one or more of the following grounds:
- The reasonable requirements of the public with respect to the patented invention have not been satisfied.
- The patented invention is not available to the public at a reasonably affordable price.
- The patented invention is not being worked in the territory of India.
Section 92: Special Provisions for National Emergency or Extreme Urgency
The government may issue a CL suo motu without waiting for three years in cases of:
- Public health emergencies
- Epidemics
- National security
TRIPS Agreement Compliance
India’s CL regime complies with the TRIPS Agreement (Article 31) under the WTO, which permits CL for public interest.
Types of Compulsory Licenses
- Voluntary Application-based License: Anyone may apply under Section 84 after the three-year period.
- Government-initiated CL: In emergencies under Section 92.
- Export-oriented CL: Under Section 92A, for manufacturing and exporting patented drugs to countries with no manufacturing capacity.
Process to Obtain a Compulsory License in India
- Application Filing: File with the Controller General of Patents.
- Notice to Patent Holder: The patentee is notified and allowed to respond.
- Hearing: A hearing is conducted to examine both sides.
- Decision: The Controller may grant the license, usually with royalty obligations.
📌 RegistrationMART offers professional assistance in drafting and filing CL applications, preparing affidavits, and attending hearings before the Patent Office.
Landmark Case: Natco vs. Bayer (2012)
India’s first compulsory license was granted to Natco Pharma for Bayer’s patented drug Nexavar, a cancer treatment.
- Price of Nexavar by Bayer: ₹2.8 lakh/month
- Natco offered it at: ₹8,800/month
- Royalty to Bayer: 6% of net sales
Outcome:
- Access to affordable medication
- Reaffirmed India’s commitment to public health over patent monopoly
Implications of Compulsory Licensing
For Patent Holders:
- Loss of exclusivity
- Compulsory royalty payments
- Possible reputational concerns
For Society:
- Greater access to essential products
- Potential for local manufacturing
- Encouragement for generic competition
For Government:
- Strategic tool for public health policy
- Must balance innovation and access
International Comparison
| Country | CL Provision Exists? | Notable Use Cases |
|---|---|---|
| India | Yes | Natco vs. Bayer |
| Brazil | Yes | HIV drug patents |
| Thailand | Yes | Heart disease and cancer drugs |
| USA | Yes (limited) | Rarely used, mostly during emergencies |
| Canada | Yes | Exports to Rwanda under WTO rules |
Criticism and Challenges
- Patent Holders’ Concern: Discourages innovation
- Global Pharma Pressure: Pressure from trade partners, especially the U.S.
- Judicial Interpretation: Subjective standards for “reasonable price” and “not worked in India”
RegistrationMART Insight: While the system is robust, there’s a need for clearer pricing benchmarks, better definition of public interest, and faster dispute resolution mechanisms.
FAQs
Q1. Is compulsory licensing limited to drugs?
No. It can apply to any patented product, including technology, machinery, and software.
Q2. What is the duration of a compulsory license?
Typically granted for a fixed term and subject to renewal based on continued public interest.
Q3. Can the patentee challenge the CL?
Yes, the patentee can appeal the decision to the Intellectual Property Appellate Board or High Court.
Why Choose RegistrationMART?
- 10+ years of expertise in patent strategy and enforcement
- Team of IP lawyers, scientists, and patent agents
- Drafting support with legal compliance
- Strong advocacy before Patent Office and courts
Conclusion
Compulsory Licensing is not anti-innovation—it is pro-public. It ensures a fair balance between the rights of inventors and the needs of society, especially in health and essential services.
Whether you are a patent owner concerned about enforcement or a company exploring the use of patented inventions in the public interest, RegistrationMART provides legal clarity and execution support at every step.
