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Compulsory License: One of the Powerful Weapons to Combat Unavailability of Patented Articles-Indian Perspective

The provision of Compulsory License (CL) has been having its place secured throughout the amendments in the Indian Patent Act happening since the time before Independence. But the grounds for obtaining CL were found inadequate to prevent the abuse of a patent; the holder has put his money and time for. The Indian patent Act, 1970 with its three-time amendments, finally came up with the fairgrounds in 2005 which not only hinder the wrongful exploitation of patent but also looks after the public interest, and rights of patentee at the same time. When it comes to Compulsory Licenses, India is one of the countries possessing a powerful weapon to its armoury. Now the person, a neophyte in the field, must be wondering what Compulsory License actually means. It is a right given to a third party or any person interested to exploit the patented invention anytime after three years from the grant of a patent by making an application to the controller of the Patent Office. There are three main bases to support the grant of Compulsory License: Intervention of central government in case of: 1) National Emergency 2) Extreme urgency 3) Public non-commercial use 
  • (Section 92, IPA 1970)
Let’s get into the details of the aforementioned grounds:  a) Request made by any person interested in case of:
  1. The reasonable requirements of the public have not been satisfied with respect to the patented invention,
  2. The invention patented is not accessible to the public at a reasonably affordable price, or
  3. The invention patented is not working in the territory of India.
The application for the compulsory license is made with the statements setting out the interest of the applicant and the facts upon which the application is based in order to satisfy the controller, who on the basis of such terms approves an application if the statements mentioned deem fit to him. However, there is one more step to be followed before making a request to the controller. The applicant must make an effort of seeking a voluntary license from the patentee and if an applicant does not succeed in making such efforts then he can opt for the controller’s approval. The only condition is, the time lapse between such efforts and making a request to the controller should not exceed a period of six months.  According to subsection 1 of section 85, once the compulsory license is granted, the central government or any person interested can apply to the controller after the expiry of two years from the date of grant of CL, for an order revoking the patent on the basis of mandatory prerequisites listed under the topic (a) of this article. The decision of such application shall be taken within one year of its being presented to the controller. With the grant of a license, the patentee is eventually going to get the royalty and remuneration, the determinants of such royalty are the nature of the invention and the expenditure incurred by the patentee in the development of the patented article. The license obtained is non-exclusive and non-assignable as the patentee may also use his own invention even after the grant of the compulsory license and the licensee can not assign the patented invention further to anyone else. The utilization of provisions related to CL is mainly done in the pharmaceutical domain. So far, only one compulsory license request has got the green signal. It was in March 2012 when the medication for treating advanced stages of liver and kidney cancer, Nexaver® owned by german pharmaceutical giant Bayer pharma, was being sold at excessively huge price worth around rupees 2.8 Lacs, reaching only 2% of the total population of patients. Thus, unable to reach the maximum patient population and owing to its exorbitant price, the CL was granted to Natco pharma who came up with an offer of selling it around rupees 9000, which is much more affordable to the patients than the brand itself. Since then, none of the claimed Compulsory License request has moved forward due to weak prima facie cases. One of the cases of unsuccessful attempts is between BDR pharma & Bristol Myers Squibb (BMS), where BDR pharma applied for Compulsory License in March 2013 for  BMS’s “Dastanib” and the license was denied by the controller on the grounds that BDR pharma could not make a strong prima facies case as it failed to make efforts in getting a voluntary License from BMS on reasonable terms and conditions.  Another application rejected for the grant of Compulsory License was the one filed by Lee pharma for Astrazeneca’s Saxagliptin protected by patent number 206543 (original patent rights held by BMS which were then transferred to AstraZeneca). The first reason was by the time the applicant could approach the controller, the time-lapse of more than a year had occurred during the process of obtaining a voluntary license from an applicant. The second reason was the failure of an applicant in showing what reasonable requirements of the public were not being fulfilled and in providing data for how the price proposed by an applicant per tablet of Saxagliptin was unaffordable to the patient population. The document for the full case can be found here. b) Intervention of Central Government: As the subsection (1) of section 92 of IPA, 1970 states, the central government with respect to patents in force can make a declaration by notification in the official gazette in case of national emergency, extreme urgency or in case of public non-commercial use. Following the notification, the controller may grant a license to the applicant under certain terms and conditions and also ensures that the patented product is available to the public at lowest price along with the patentee getting his benefits from the patent rights. In such cases of emergency or urgency, the prerequisite of getting the voluntary license from patentee can be by-passed which means instead of seeking the permission from the patentee, this provision allows the generic drugmaker to apply for the license directly. One such example is when the health ministry recommended the issuance of compulsory license to allow generic entry of the drug Herceptin in view of its higher price by the swiss drugmaker Roche, who is the innovator of the medicine. The Department of Industrial Policy and Promotion (DIPP) after deliberating the issue had refused this plea. c) Export of patented pharmaceuticals in certain exceptional circumstances: According to section 92A of IPA 1970, in the circumstances when the country due to its inadequate or no manufacturing capacity in the healthcare sector of concerned product is unable to address the need of public health problems, then the compulsory license for the manufacturer or export of pharmaceutical products can be issued for such country. Also, such countries may grant the compulsory license for import of such products from India. This section is parallel to paragraph 6 of the Doha Declaration which entered the statute of Indian Patent in 2005. Doha declaration is a waiver to grant export of compulsory License by the World Trade Organization (WTO) to protect the public health in the countries which fail to provide essential medicines to its ailing population. With reference to the global perspective, during the pandemic of avian flu, Taiwan had also issued a compulsory license for the import of Tamiflu (Oseltamivir), the only medicine available for the treatment at that time and was manufactured by Roche. In the current outbreak of COVID-19 which has claimed a number of lives, chances of exploring the option of compulsory licenses are there. The public need has compelled some of the countries like Israel to bypass several patenting rights related to lopinavir-ritonavir combination. Though the Government of India is yet to take the decision of leveraging the use of compulsory license to facilitate the generic production of medicine against COVID-19 pandemic.