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Compulsory Licensing of Patents : Just Securing Rights on Inventions isn't Enough

Provisions under the Patents Act 1970 relating to Compulsory license
  • Chapter XVI
  • Section 82 to 94
Preamble - principles applicable to working of patented inventions

Patents are granted to encourage inventions and to secure that the inventions are worked in India on a commercial scale and to the fullest extent that is reasonably practicable without undue delay. They are not granted merely to enable patentees to enjoy a monopoly for the importation of the patented article. The protection and enforcement of patent rights contribute to the promotion of technological innovation and to the transfer and dissemination of technology, to the mutual advantage of producers and users of technological knowledge and in a manner conducive to social and economic welfare, and to a balance of rights and obligations. 

Patents granted do not impede protection of public health and nutrition and should act as instrument to promote public interest specially in sectors of vital importance for socio-economic and technological development of India. Patents granted do not in any way prohibit Central Government in taking measures to protect public health

The patent right is not abused by the patentee or person deriving title or interest on patent from the patentee, and the patentee or a person deriving title or interest on patent from the patentee does not resort to practices which unreasonably restrain trade or adversely affect the international transfer of technology. Patents are granted to make the benefit of the patented invention available at reasonably affordable prices to the public.

What is a Compulsory license?

A situation of Compulsory license arises when the Patentee i.e. grantee or proprietor of the patent fails to satisfy various conditions more explicitly explained hereunder and the Controller of Patents on an application made to him and after being satisfied on the case, may direct the patentee to grant a licence to such applicant.

Who can make an application for Compulsory license?

An application under this section may be made by any person notwithstanding that he is already the holder of a licence under the patent and no person shall be estopped from alleging that the reasonable requirements of the public with respect to the patented invention are not satisfied or that the patented invention is not worked in the territory of India or that the patented invention is not available to the public at a reasonably affordable price by reason of any admission made by him, whether in such a licence or otherwise or by reason of his having accepted such a licence.

Every such application shall contain a statement setting out the nature of the applicant's interest together with such particulars as may be prescribed and the facts upon which the application is based.

When can the application be made - time limits?

At any time after the expiration of three years from the date of the grant of a patent, any person interested may make an application to the Controller for grant of compulsory licence on patent.

Grounds / Circumstances under which Compulsory licenses are issued

A person can make application on any of the following grounds, namely:—

  • that the reasonable requirements of the public with respect to the patented invention have not been satisfied, or
  • that the patented invention is not available to the public at a reasonably affordable price, or
  • that the patented invention is not worked in the territory of India.

- Compulsory license on notification by Central Govt.

Also section 92 specifies that ff the Central Government is satisfied, in respect of any patent in force in circumstances of national emergency or in circumstances of extreme urgency or in case of public non-commercial use, that it is necessary that compulsory licenses should be granted at any time after the sealing thereof to work the invention, it may make a declaration to that effect, by notification in the Official Gazette, and thereupon the Controller shall on application made at any time after the notification by any person interested, grant to the applicant a licence under the patent on such terms and conditions as he thinks fit; and in settling the terms and conditions of a licence granted under this section, the Controller shall endeavour to secure that the articles manufactured under the patent shall be available to the public at the lowest prices consistent with the patentees deriving a reasonable advantage from their patent rights.

Compulsory licence for export of patented pharmaceutical products in certain exceptional circumstances

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 importation of the patented pharmaceutical products from India. The Controller shall, on receipt of an application in the prescribed manner, grant a compulsory licence solely for manufacture and export of the concerned pharmaceutical product to such country under such terms and conditions as may be specified and published by him.

Terms and conditions of compulsory licences / Benefits to the Patentee

In settling the terms and conditions of a licence under section 84, the Controller shall endeavour to secure -

  • that the royalty and other remuneration, if any, reserved to the patentee or other person beneficially entitled to the patent, is reasonable, having regard to the nature of the invention, the expenditure incurred by the patentee in making the invention or in developing it and obtaining a patent and keeping it in force and other relevant factors;
  • that the patented invention is worked to the fullest extent by the person to whom the licence is granted and with reasonable profit to him;
  • that the patented articles are made available to the public at reasonably affordable prices;
  • that the licence granted is a non-exclusive licence;
  • that the right of the licensee is non-assignable;
  • that the licence is for the balance term of the patent unless a shorter term is consistent with public interest;
  • that the licence is granted with a predominant purpose of supply in the Indian market and that the licensee may also export the patented product if need be in accordance with the provisions of sub-clause (iii) of clause (a) of sub-section (7) of section 84;
  • that in the case of semi-conductor technology, the licence granted is to work the invention for public non-commercial use;
  • that in case the licence is granted to remedy a practice determined after judicial or administrative process to be anti-competitive, the licensee shall be permitted to export the patented product, if need be.

No licence granted by the Controller shall authorise the licensee to import the patented article or an article or substance made by a patented process from abroad where such importation would, but for such authorisation, constitute an infringement of the rights of the patentee.

Notwithstanding the above provision, the Central Government may, if in its opinion it is necessary so to do, in the public interest, direct the Controller at any time to authorise any licensee in respect of a patent to import the patented article or an article or substance made by a patented process from abroad (subject to such conditions as it considers necessary to impose relating among other matters to the royalty and other remuneration, if any, payable to the patentee, the quantum of import, the sale price of the imported article and the period of importation), and thereupon the Controller shall give effect to the directions.

Termination of compulsory licence

On an application made by the patentee or any other person deriving title or interest in the patent, a compulsory licence granted earlier may be terminated by the controller, if and when the circumstances that gave rise to the grant thereof no longer exist and such circumstances are unlikely to recur: 

Provided that the holder of the compulsory licence shall have the right to object to such termination.

While considering such an application, the Controller shall take into account that the interest of the person who had previously been granted the licence is not unduly prejudiced.

Revocation of patents by the Controller for non-working

Where, in respect of a patent, a compulsory licence has been granted, the Central Government or any person interested may, after the expiration of two years from the date of the order granting the first compulsory licence, apply to the Controller for an order revoking the patent on the ground that the patented invention has not been worked in the territory of India or that reasonable requirements of the public with respect to the patented invention has not been satisfied or that the patented invention is not available to the public at a reasonably affordable price.

The Controller, if satisfied may make an order revoking the patent. Every such application shall ordinarily be decided within one year of its being presented to the Controller.
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