Day 55 – Q 3.What do you understand by compulsory licensing in the context of India’s IPR legal jurisprudence? What are the associated issues? Analyse.

3. What do you understand by compulsory licensing in the context of India’s IPR legal jurisprudence? What are the associated issues? Analyse. 

भारत के आईपीआर कानूनी न्यायशास्त्र के संदर्भ में अनिवार्य लाइसेंसिंग से आप क्या समझते हैं? इससे संबंधित मुद्दे क्या हैं? विश्लेषण करें।

Introduction:

Compulsory licenses are authorizations given to a third-party by the Controller General 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. This concept is recognised at both national as well as international levels, with express mention in both (Indian) Patent Act, 1970 and TRIPS Agreement. 

India’s first ever compulsory license was granted by the Patent Office on March 9, 2012, to Natco Pharma for the generic production of Bayer Corporation’s Nexavar, a life saving medicine used for treating Liver and Kidney Cancer. Bayers sold this drug at exorbitant rates, with one month’s worth of dosage costing around Rs 2.8 Lakh. Natco Pharma offered to sell it around for Rs 9000, making it affordable for people belonging to every stratum. 

Body

There are certain pre-requisite conditions, given under sections 84-92, which need to be fulfilled if a compulsory license is to be granted in favour of someone.

As per Section 84, 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 –

• 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 worked in the territory of India. 

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”.

Issues related to Compulsory License

• Creation of Gray Market – In case of compulsory licensing, where the generic company (licensee) is given rights to manufacture and sell the patented drug to the target country only for which the compulsory license is granted but instead, the company itself or its dealers sell the drug to other countries also. Also when compulsory license is granted to some company for manufacture of a certain drug then some other generic companies also start making same drug without any license.
• Difference in standards of National Emergency – no fixed standardized definition of national health emergency is available. Having a fixed, narrow and rigid definition of national emergency which is applicable to all the countries is a twisted task because every country has their own health problems, different diseases, lifestyle and population.
• Apprehensions of the Patent holder – Applicant of compulsory license who has not spent a single penny on the invention cannot be equated with the inventor. Certain patent holders are of the view that compulsory license will dishearten the inventors and will discourage further innovative activities.
• Royalty Free Practice or Low Royalty – it is expected that royalty free grant of compulsory license gives chance to local or small industries to develop and utilize patented invention. This enhances their manufacturing skills and efficiency which is helpful for their future development and that of nation and society as well. But still patentee must be given some royalty as per the agreement.

Conclusion

The main aim of compulsory license is to improve access of public to patented expensive medicines. This also increases the competition in market and cuts down the price of patented drugs, because dominance of a drug in market may lead to high price and hence abuse of patent may result. Moreover TRIPS and Doha Declaration considered compulsory license as an important provision so as to provide health benefits to the people without any discrimination on the basis of color, caste, creed or even country.