This Article has been written by Ms. Divya Lalit Jain, a 4th year B.L.S. LLB. Student of MGM Law College, Navi Mumbai.
DEFINING PATENT
According to WIPO, a patent is an exclusive right given for an invention, which is generally a product or a technique that offers a new method of doing something or a new technological fix for a problem.
For 20 years, a patentee will enjoy sole ownership of his invention, and during that time, he will be prohibited from allowing anybody else to use it in any way. However, under certain conditions, a third party may be granted a compulsory licence to use a patented product. The Indian Patents Act of 1970, Chapter XVI, introduces the idea of forced licencing.
UNDER THE PATENTS ACT, WHAT DO “COMPULSORY LICENSES” MEAN?
Compulsory licences are permissions granted to a third party by the Controller General to manufacture, use, or market a certain product or use a specific technique that has been protected by a patent, without the need for the owner’s consent. This idea is acknowledged on both a national and international scale, and it is specifically mentioned in both the TRIPS Agreement and the (Indian) Patent Act, 1970. If a compulsory licence is to be issued in someone’s favour, the prerequisite requirements listed in Sections 84 to 92 must be met.
According to Section 84, anyone can request a compulsory licence from the Controller after three years have passed if any of the following conditions are met: the public’s reasonable needs for the patented invention have not been met; the patented invention is not available to the public at a reasonably affordable price; or the patented invention is not being used.
Additionally, subject to a notice from the Central Government, the Controller may grant obligatory permits “suo motu” under Section 92 in situations of “public non-commercial usage,” “national emergency,” or “severe urgency.”
The ultimate decision to award the obligatory licence rests with the Controller, who also takes into consideration other considerations such the nature of the innovation, the applicant’s ability to use the product for the benefit of the public, and the reasonability. Even when a third party receives a forced licence to use a patent, the patent holder retains ownership of the property and is still entitled to compensation for copies of the items produced under the compulsory licence.
TRIPS AGREEMENT-RELATED CHANGES TO COMPULSORY LICENCING
In order to foster global competition and create a universal patent system, the TRIPS Agreement, a WTO agreement that harmonised the baseline requirements for IP protection across all WTO members, mandated that its member countries address patent failure. As a result, the TRIPS agreement has a number of clauses that deal with preserving the law, morals, and health.
The TRIPS Agreement further specifies the terms and conditions for forced licencing, including prior attempts to get a licence from the patent owner, appropriate payment of the patent owner, and non-exclusive and non-assignable usage. Most crucially, TRIPS additionally stipulates that such use must be permitted for the purpose of supplying the member’s domestic market.
THE IMPACT OF THE TRIP AGREEMENT ON INDIA AND MANDATORY LICENCING
The Indian patent rules did not permit the granting of product patents prior to India’s accession to the TRIPS Agreement; as a result, new and inventive pharmaceuticals could only be introduced without a patent’s protection. However, the Indian patent rules were changed to permit the patenting of product patents once India acceded to the TRIP Agreement. Additionally, the availability, quantity, and cost of the pharmaceuticals were made more flexible for the patent holders as a result of this step. In order to avoid the abuse of patent rights, the Indian Patent Laws, as a consequence, included several detailed measures for compulsory licencing.
CASES INVOLVING THE GRANTING OF A COMPULSORY LICENCE
On March 9, 2012, the Patent Office issued the first-ever compulsory licence in India to Natco Pharma for the generic manufacturing of Nexavar, a life-saving drug used to treat liver and kidney cancer and produced by Bayer Corporation. One month’s worth of doses of this medicine was sold by Bayers for about Rs 2.8 lakh. Natco Pharma proposed to sell it for about Rs. 9000, making it accessible to individuals from all socioeconomic levels. The judgement was made for the general public’s advantage, and all three requirements of Section 84 were met.
More instances of compulsory licence grants in the pharmaceutical industry have been rejected by the controller for a variety of reasons, including failure to establish a prima facie case, failure to obtain a patent licence prior to applying for a compulsory licence, and failure to demonstrate widespread use of the product in question. It is claimed that having a patent registered alone is insufficient under the law of patents. The strength of the patentee’s argument as well as the strength of the defence must be considered by the court in its entirely.
Another instance is of the cancer medication SPRYCEL, made by Bristol-Myers Squibb, BDR Pharmaceuticals International Pvt Ltd submitted a compulsory licence application in 2013, and for the diabetic medication Saxagliptin, made by AstraZeneca, Lee Pharma filed a compulsory licence application in 2015. The Indian Patent Office denied both petitions because neither Lee Pharma nor BDR Pharmaceuticals International Pvt. Ltd. provided adequate justification for such an award. The Indian Patent Office argued in the case of BDR Pharmaceuticals International Pvt. Ltd. that the applicants for a compulsory licence had not made a sufficient effort to obtain a licence from the patent holder and lacked the necessary manufacturing capabilities to satisfy the needs of the general public. However, given the number of comparable-priced medications currently on the market, Lee Pharma was unable to show how the public would benefit from a generic version of the drug.
According to recent decisions by the Indian courts, the prohibition on anti-competitive behaviour in the Competition Act and the requirement for compulsory licencing in the Patent Act are not mutually exclusive; rather, they must be interpreted together. The Controller may also take into account whether a patentee has used anti-competitive tactics. However, the Controller would likewise proceed on the aforementioned premise, and—on a theory similar to issue estoppel—the patentee would be estopped from asserting the opposite if CCI had ultimately determined that a patentee’s conduct was anti-competitive and its finding had achieved finality.
According to the legal perspective, the clause regarding the granting of a compulsory licence is for the benefit of the public and cannot be abused to restrict the rights of patent owners. The rights of the user and the use of the product for welfare must coexist in harmony.
CONCLUSION
Since forced licencing is an exception and a flexible rule to the general rule of patents, it must be used carefully. The provision lies in the middle; neither full patent protection is provided, nor is it completely refused. It has an immediate impact on innovation financing, and its unrestricted usage may make multinational pharmaceutical corporations reluctant to propose novel medications in other nations. Therefore, if businesses wish to prevent their product from being subject to compulsory licencing, they must set the price of their patented module in accordance with the nation’s economic situation.
Patients in developing nations who are struggling financially now have hope thanks to mandatory licencing. Due to the economic situation of the vast majority of the population, India requires this supply. The difficulty, though, is that it must both protect public health and adhere to international rules for patent protection.
REFERENCES:
- The Patents Act, 1970 (Act 39 of 1970), s. 84 (6).
- World Trade Organization, TRIPS And Health, Compulsory Licensing of Pharmaceuticals and TRIPS.
- Current Scenario of Patent Act published by Indian Journal of Pharmaceutical Education and Research
- https://www.thehindu.com/business/companies/natco-pharma-wins-cancer-drug-case/article4475762.ece
- https://www.worldtrademarkreview.com/regionindustry-guide/india-managing-the-ip-lifecycle/2020/article/dealing-compulsory-licensing-in-india
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