COMPULSORY LICENSING By- Harshit Sandhir

COMPULSORY LICENSING

Authored By- Harshit Sandhir

 

DECLARATION

I the undersigned solemnly declare that the report “Compulsory Licensing” is based on my own work carried out during the course of study.

 

I assert the statements made and conclusions drawn are an outcome of my research work. I further certify that:

 

1. The work contained in the report is original and has been done by me under the general supervision of my supervisor.
2. The work has not been submitted to any other Institution for any other degree/diploma/certificate in this university or any other University of India or abroad.
3. We have followed the guidelines provided by the university in writing the report.
4. Whenever we have used materials (data, theoretical analysis, and text) from other sources, we have given due credit to them in the text of the report and giving their details in the references.

TABLE OF CONTENTS

1. Abstract……………………………………………………….……

2. Introduction……………………………………………………….

3. Subject of Research………………………………………………...

4. Area of Research…………………………………………………...

5. Research Topic……………………………………………………...

1. Research Objectives and Research Questions…………………….
2. Research Methodology…………………………………………….

8. Scope of Study…………………………………………………….

9. Proposed Headings………………………………………………

 

1. ABSTRACT

A patent is a temporary monopoly granted. It acts as a ticket for the inventor to use the invention exclusively and monetize by licencing the patent. The government grants monopoly to the patentee for complete transparency and disclosure of the patented product/process to the government. Patents foster innovation in the society. When a person is unable to obtain a patent license normally, the government will impose compulsory licensing. License is necessary for the welfare of the society.

The date of application is very important as it the date from which the protection is granted for twenty years. And the protection granted is for the territory in which patent is registered.

Some illustrations of useful inventions:

  Gravity Powered Shoe Air-Conditioner

Israel Siegel first patented the shoe in 1994. The powered motion of the person wearing the shoe was used in the shoe's working mechanism. Every step the person takes activates the air-conditioner compressor.

 

 Pen with a Scanner

Christer Fahraeus, also known as C-Pen, invented and manufactured the C-Pen. The pen is used to decipher letters, numbers, and figures. Text that has been scanned can be easily transferred to a computer. In 1998, a patent for the Pen scanner was granted.

 

 Steel Kidneys (Dialysis Machine)

Nils Alwall was granted the patent for steel kidneys in 1946. The kidneys were developed twenty years before the invention was mass produced and used.

 

       Titanium Screws and Fixing Teeth

Doctors and researchers were well aware that the body rejects all foreign objects, but Per-Ingvar Branemark accomplished in developing a method for attaching a number of artificial limbs. This method was invented in the 1950s and was granted patent protection in 1993.

 

1. Subject of Research:

The subject of research – “Compulsory Licensing”. Different views to what should be considered about Compulsory Licensing. Perspective on the existing laws.

1. Area of Research

Present research work falls within: - Intellectual Property Law, World Trade Organisation (WTO), Trade Related Aspects of Intellectual Property Rights (TRIPS).

1. Research Topic

Compulsory Licensing

1. Research objectives and Research Questions

1. To study and understand the concept of Compulsory Licensing

• What is Licensing? What is Compulsory Licensing?
• What is Position of Compulsory licensing in India and around the world? 2.To study the concept of Patents
• What are the existing laws regulating Patents and the rights of Patentee (protection from Infringement of rights)?
• Are old laws relating to patent protection enough?
• What is the concept of patent in an Intellectual property law?

1. News Laws for the protection of patent rights from abuse

• What New laws which have been implemented around the world? and what should be implemented?
• What were the Loopholes in the old laws?
• What are the Places the aggrieved can seek asylum?

1. Constitutionality • What is the scope of Section- 3D in view of Patents?

• What is the Judicial stand?

1. Problem in implementation of laws • Will Compulsory Licensing solve the problem?

 

1. Research methodology

The researcher is using the Doctrinal Legal Research method for the purpose of furtherance of the research.

 

1. Scope of Study

The study will focus on the rights of patentees and compulsory licensing in relation to the Intellectual Property Rights. The researcher will highlight why patent grant can be a problem. The researcher in the present study will also study on the issue of the violation the patent rights given to inventors. The researcher will focus on the changing dimensions of the licensing in view of compulsory licensing. The researcher aims to do a comparative study of the same and highlight the lacunas prevailing therein and suggest countermeasures.

1. Proposed Chapterization

CHAPTER-1

INTRODUCTION

1. 1. Introduction
   2. Rule of Novelty Exceptions
   3. Non- Patentable Inventions

CHAPTER-2

TRADITIONAL KNOWLEDGE

1. 1. Traditional Knowledge
   2. Traditional Knowledge Digital Library
   3. Risks to Traditional Knowledge

CHAPTER-3

PATENTEE RIGHTS AND OBLIGATIONS

1. 1. Person Entitled to Get a Patent
   2. The Rights of Patentee
   3. The Obligation of Patentee

CHAPTER-4

WHY PATENT IS GRANTED

4.1 Objective behind Granting a Patent for an invention

 

 

CHAPTER-5

EVERGREENING

1. 1. Exploring the idea of Patent Evergreening
   2. Patent Evergreening with the context to TRIPS
   3. Evergreening and its Consequences
   4. Laws towards Patent Evergreening and Legislations
   5. Patent Evergreening and Judicial Overlook

 

CHAPTER-6

SECTION- 3D

6.1 3D Section Patent India- A Necessary Evil

 

CHAPTER-7

COMPULSORY LICENSING

1. 1. Licensing
   2. Compulsory Licensing Explained in Brief
   3. Compulsory Licensing in India and its Variation Due to TRIPS Agreement
   4. Objective for Compulsory License Grant to Third Party

CHAPTER-8

PATENT ABUSE AND REASONABLE REQUIREMENTS OF PUBLIC

1. 1. Patent Rights Abuse and Its Ways
   2. Provisions for Satisfying Requirements of the Public which are reasonable

 

CHAPTER-9

 CONTROLLER

1. 1. Aspects Considered by the Controller for an Application for Compulsory License
   2. Compulsory Licensing Requirements and Provisions (Terms)

 

CHAPTER-10

SPECIAL PROVISIONS CL

1. 1. Special Provisions Relating to Compulsory Licensing
   2. Bolar Provision
   3. Parallel Importation
   4. Cross- Border Licensing

CHAPTER-11

PROCESS OF COMPULSORY LICENSE

1. 1. Procedure to Compulsory License Grant to Third Party
   2. Grant Opposition to Compulsory Licensing
   3. Compulsory Licensing Termination
   4. Appeal/ Review

CHAPTER-12

 HEARING BOTH SIDES

1. 1. The Compulsory Licensing Benefits and Pros
   2. Why C L may be a Bad idea
   3. Final Goal to Achieve Consensus

CHAPTER-13

COMPULSORY LICENSES CASES IN INDIA

1. 1. Bayer Corp V Natco Pharma
   2. Bdr- Pharma Int V Bristol Myers -Sqibb Co. International PVT Ltd
   3. Lee Pharma V AstraZeneca AB

CHAPTER-14

THE END

1. 1. Conclusion
   2. Bibliography

CHAPTER 1 - INTRODUCTION

1. 1. INTRODUCTION

Intangible property is to be given equal importance as tangible property as automobiles, land. Intellect of a person used in making a product or a process needs to be protected too. It belongs to the inventor. The intellectual property laws in India are acknowledged at every level of the administration and judiciary thinks in the direction of the progression of laws according to the international standards of TRIPS. The legislation is in consensus with the judiciary.

In the old Latin term1 patent meant to accessible to the general public. A patent grants the owner exclusive rights to the claimed invention. For a limited time period the owner of the invention is granted right to patent. It is kind of a monopoly right but with limitations. The limitations are for the patentee to work the patent in the country and not waste the protection given to it.

 

 

 

1 “Patere”

 

 

1. 1. RULE OF NOVELTY EXCEPTIONS

Instances when the novelty rule does not apply –

    When instead of getting the consent of the inventor subject matter is published.

    Government of India has been previously communicated.

    When a paper is read in-front of a learned society or the invention is displayed in an exhibition notified by the govt. To file an application of patent twelve months grace period is allotted.

    When there is working on the trials for the reasonable requirements of public.

 

1. 1. NON-PATENTABLE INVENTIONS

    Frivolous inventions or not in accordance with natural-law-  Inventions injurious to public health or not in accordance to law

    Formation of an abstract theory or mere discovery of non-living substance or living thing or scientific principle

    The mere discovery of a new form of a substance which does not result in the enhancement of a known efficacy of that substance or the mere discovery of a new property or new use of a known process, machine or apparatus unless such known process results in a new product or employs at least one new reactant is not patentable.

    For producing a substance, the process involved or mere admixture resulting in a substance in which the properties of the components is just an aggregation.

    Copying of known devices working independently or mere rearrangement.

    Any process relating to agriculture or horticulture is not patentable.

    Any process for the medicinal, surgical, curative, prophylactic, diagnostic, therapeutic or other treatment of human beings or any process for a similar treatment of animals to render them free of disease or to increase their economic value or that of their products is not patentable.

    Biological processes which are essential or multiplication of animals and plants or plants and animals or seed varieties but excluding the microorganisms.

    An algorithm or mathematical or computer program or business method are not patentable.

    Any copyrightable material is not patentable that is a literary, artistic or musical work and also cinematographic film.

    Method of playing game or performing a mental act or a mere scheme.

    Display or presentation of information is not patentable.

    Topography of circuits which are integrated.

    Any invention related to traditional knowledge which already exists or is known to the people using the traditional knowledge for many years.

    Inventions relating to national security that is the inventions falling under atomic energy act section 20(l).

 

CHAPTER 2- TRADITIONAL KNOWLEDGE

1. 1. TRADITIONAL KNOWLEDGE

The knowledge or tips inherited by people from their elders or ancestors which helps them to lead life easily and interact with nature in a healthy way. Neem is a plant which has been used in India for its Anti – Fungal properties. Every country or region is known to have some degree of traditional knowledge. Complexities in life and survival skills taught for development. Indigenous communities need to be compensated for the knowledge they share to the world. Encroachment being done to the communities can lead to extinction of such systems. The conservation and preservation of the knowledge of the ancient and cultural heritage is the need of the hour. Foreign attempts to manipulate the whole identity of the knowledge of the indigenous communities.

1. 1. TRADITIONAL KNOWLEDGE DIGITAL LIBRARY

The TKDL has been made to digitalize all the ancient texts and traditional knowledge passed on to the people of India through centuries. It the small things we do in are daily life like using turmeric as a wound healer. The attempt of making T K digital is to have an easier access. This will indeed help in stopping infringement of the rights of the communities who are not given a compensation for the knowledge used by outsiders and also have a strong case with evidence to present to the world.

 

1. 1. RISKS TO TRADITIONAL KNOWLEGDE

Biopiracy –

When plants native to a country with different properties are unethically utilised for the properties known to the natives for centuries2.

 

Bio-prospecting –

By making new products with the aid of the data gathered of the biochemical and genetic information using bio-prospecting.

 

Intrusion –

Industrialization is the leading cause and encroachment of forests and wildlife this leads to loss of habitat and traditional knowledge.

 

CHAPTER 3- PATENTEE RIGHTS AND OBLIGATIONS

1. 1. PERSON IS ENTITLED TO GET A PATENT
2. The Patent Act 1970 says that only the person who invents the patented product or process (entitled to be called as the first and true inventor), any person who is assigned by the person who invented the patented product or process, or any representative of the inventor which has been allowed legally to do so. All these circumstances in which patent can be claimed.

 

 

 

 

2 “Turmeric and neem case”

 

1. 1. THE RIGHTS OF PATENTEE

 In relation to his product or process the sole right to exploit is held by the patentee. He has the authority to prohibit others from using it without his permission.

    The patentee can choose whether or not to licence his invention. The right to licence or assign is determined by the patent owner. The assignment must be written down and documented. It cannot be used as evidence of title.

    The patent owner has the option to surrender the patent. This will be done after notifying anyone who has expressed an interest.

    Suit for infringement can be filed by the patentee.

1. 1. THE OBLIGATION OF PATENTEE

    A patent can only be used by the government. It should be noted certain conditions can be put on which would modify the use of patent some can restrict or prohibit their use. Government can import any patented drug or medicine towards distributing it to any hospital or institute which may be run by the government or behalf of the government or for its own use. This aforementioned method is permissible and no compensation needs to be done in the form of royalty and no consent needed to be taken from patentee. Aside to that, goods produced through the process (patented) in exchange for appropriate compensation may be sold by the government.

 When reasonable public rights in relation to the invention are not satisfied. C L may be granted if the patented invention in India is not worked or it is not affordable to the general population.

    The controller may give directions for the patents related to defence purposes which would restrict any publication or the publication can also be prohibited.

    Patents that are no longer useful may be revoked.

    Patents lapse for non-renewal of payment, and such patents may be restored after imposing certain restrictions on the patentee.

 

CHAPTER 4- WHY PATENT IS GRANTED?

4.1 OBJECTIVE BEHIND GRANTING A PATENT FOR INVENTION

With the grant of patent to the inventor he/she gets protection for their idea. The protection also encourages innovators to do more research and development, which also includes the easy acquisition of funding required for the process of research and development in the area of innovation. An inventor can work and function only if he/she knows that they can get some monetary benefit for applying the mind and time. The protection granted to patents helps in commercialising and making them available to people to the fullest extent without any delay. When patent is granted, it enriches the patentee some rights which enable them to assign the license to third parties which in-turn will lead to working of the patent in the territory.

 

CHAPTER 5- EVERGREENING

1. 1. EXPLORING THE IDEA OF PATENT EVERGREENING

A company usually a pharmaceutical company makes some inconsequential changes in the patented invention (which usually doesn’t improve the working of the invention) to get it patented again. So, they can continue to monetize on it. It usually happens near the twentyyear expiration period of the patented invention by the pharmaceutical company. The increasing efficiency in case of pharmaceutical patents is called as the therapeutic efficacy. Evergreening is very common in the developed world where the minor improvements are allowed to have protection of patent. This is justified as compensatory cost endured by the company during the phase of intensive research and development by the company during the primary patent. Evergreening could be called as secondary patent as it done after the first patent with only some minor changes. The fall in prices of the invention is predictable by the time of expiry of patent but evergreening may prevent, this makes the under-privileged people suffer who cannot afford the life saving drugs. Some illustrations of the tactics done by the companies for evergreening-

    There may be mixing or combining two or more drugs.

    Some drugs are made in a way leads to changes in the mechanism of the action of the drug.

    A different treatment method maybe adopted or screening regimen.

    Some scientific changes made in which isomeric forms are changed and some changes are made to the derivatives.

1. 1. PATENT EVERGREENING WITH THE CONTEXT TO TRIPS

TRIPS is crystal clear on its policy for providing protection through the form of patents to all products and processes which satisfy the criteria of the three-fold test of novelty, being capable of industrial application and having an inventive step. This is enshrined in the Article 27(1) of the agreement.

Public health has been given more importance than the monopoly rights in the TRIPS due to change in the world view of better public health policies. This can be seen in the exceptions provided in the by TRIPS for the members in the patentability criteria- methods for diagnosing, treating, and operating on humans or animals; this is enshrined in the Article 27(3).

All TRIPS signatories must follow strict regulations, including maintaining minimum standards for providing product patents enshrined in the Article 27(1) towards pharmaceutical patents. Flexibility allowed for the welfare of public good and health policies enshrined in the Article 27(3) encourages the member states to prioritize the working of the patent in the country with focus on public health as well as cut down the perpetual evergreening.

1. 1. EVERGREENING AND ITS CONSEQUENCES

Evergreening became a legal way-out for companies to exploit and maximize profits by making minor changes in the patented product (usually a pharmaceutical drug) and then taking a patent for that so that they could extend the twenty-year-old limit of the patent in India. This made impossible for the generic companies to make affordable drugs after the expiry of patent term for the people of the country whose only hope was generic medicine.

 

1. 1. LAWS TOWARDS PATENT EVERGREENING AND LEGISLATIONS

Till 2005, patents for products (including pharmaceutical) were not provided. An amendment was introduced in the Indian patent law which resulted in changing the definition of patentability. Additionally, the amendment also impacted the section 3(d) which put a full stop on the perpetual cycle of evergreening3 with the help of a new patent application.

1. 1. PATENT EVERGREENING AND JUDICIAL OVERLOOK

In India there have been various patent disputes between the foreign pharma giants and generic Indian companies. All the judgements have provided more clarity on Indian patent act and the judiciary (Supreme Court of India) has clearly stated that the main essence of the patent law is to protect inventions and the rights of inventors to seek protection for their intellectual property. It also discourages evergreening of patents which is also called as secondary patents because it leads to blocking the access to life saving drugs for the population.

Novartis Case – A landmark Judgement

Novartis is a pharmaceutical company based out of Switzerland. In 2005, post the amendment in the Indian patent act the company filed an application for patent of its drug glivec. Glivec is the drug which is used to treat cancer and tumour such as leukaemia, intestinal tumour.

This particular application was rejected by the Madras Patent office on the basis of its not meeting the conditions laid out in section 3(d). The office did not find any enhancement in the said drug and declared it unfit to be patented. Additionally, this drug was already patented in approximately thirty plus countries. This judgement was challenged by the company filing two petitions –

First one appealing the correctness of the rejection of their patent request Second challenging the very essence of section 3(d) of ipa.

Both the petitions were rejected. This was further challenged by the company in Supreme Court. The fate of the matter did not change, the Supreme Court upheld the decision initially passed by the Madras IPO. Their rationale for rejecting the patent applied by the company was also based on non-compliance of section 3(d).

Now this decision was a boon to the entire mass of population who relied heavily on the low purchase price of the similar drugs already present in market which are also known as ‘generics.

 

3 “Section-2(1)(ja) IPA”

 

CHAPTER 6- SECTION- 3D

6.1 3D SECTION PATENT INDIA – A NECESSARY EVIL

This section clearly states that a new patent cannot be acquired until the conditions are satisfied –

    There should an improvement to the old product/process such that it enhances the efficacy of that invention in a way which can be measured.

    In case of pharmaceutical products, it has to be shown that the therapeutic efficacy if the drug is enhanced and is known to give better results in comparison to the previous one.

    The third point is a new product or reactant has resulted from the known process.

Case –

Pfizer filled for patent in 20034 and fought a legal battle, eventually the patent was denied it was due to the Section 3D. The lack of proof to show enhanced efficacy of the enantiomer of Tofecitinib. The tofecitinb was previously patented in India and was being used for arthritis.

 

CHAPTER 7- COMPULSORY LICENSING

1. 1. LICENSING

Licensing is a way of giving consent to other party (licensee) to use the invention for which the original owner (patentee/licensor) is compensated in the form of money. It could be in any form such as a license fee or royalties from the usage of that product and process. The document used to give authorization is called a license. There can be multiple licenses to different parties or a single license. The patentee is given the right of licensing but the patentee may refuse to do so and also not exploit the patent himself which would result in a deadlock. To prevent this type of misuse of patent rights compulsory licensing was introduced.

 

 

4 “Application number: 991/MUMNP/2003 in IPO”

1. 1. COMPULSORY LICENSING EXPLAINED IN BRIEF

The government provides a compulsory license to a third party for manufacturing a product that has already been patented. The idea behind this license is to restrict monopolizing of the particular product which had been patented as the owner was abusing the sole right of manufacturing that product. Any interested party can file for this license. The government will grant compulsory license upon the fulfilment of below three conditions-

 

    The patented product is launched in the market at an unreasonable price i.e., not affordable to the masses.

    The product is not manufactured outside India.

    The product does not fulfil the normal justified public requirements. Before this license is granted the act requires the particular third party –

    to prove that they made conscious efforts to acquire the license from the original patent holder on reasonable terms.

    Additionally, he/she has to prove that these efforts were not fruitful within a reasonable time as considered fit by the controller.

    The party should have the required expertise to manufacture the particular product such that it meets the requirement by public.

The intention of the government is to protect the public against the monopoly of the patent holder and discourage/remove the anti-competitive practices that would restrict or impede technology transfer5.

One such example is the Natco Bayer compulsory license –

Bayer, is a pharmaceutical company based out of Unites States of America. In 2011, Natco which is a generic pharmaceutical (based out of Hyderabad, India) applied for a compulsory license for a drug Sorfenib Tosylate called as Nexavar sold by Bayer. This was used for curing cancer of kidney and liver. The license was granted to Natco such that they could manufacture the drug in India but upon payment of a royalty on net sales (6% quarterly). This license was provided as Bayer failed to comply with the following –

5 “Article-27 TRIPS”

    Price - Bayer provided the drug monthly at two lakh eighty thousand. On the contrary Natco showed capability to provide the same supply at rupees eighty-eight hundred.

    Production – Bayer was importing the drug whereas Natco could easily manufacture it in India.

    Public – Bayer was not able to meet the reasonable requirements as they were only able to provide the drug to only two percent of the patient population.

Natco was provided the compulsory license in the year 2012. Bayer took this matter to IPAB. In 2013 the board also found Bayer lacking in all the three criteria and Natco was given a green flag to continue with the production and sale of the said drug. The only change was that Natco was asked to pay seven percent as royalty as opposed to the initial six percent. This was a remarkable judgement which set the groundwork for the future compulsory licensing cases.

1. 1. COMPULSORY LICENSING IN INDIA AND ITS VARIATION DUE TO TRIPS AGREEMENT

Process patents were available to inventors in India till 2005. From the 2005 amendment product patents were also introduced to conform with the policy of the TRIPS agreement, it provided patentees greater flexibility in terms of drug availability, quantity and price value. With the Doha Declaration the compulsory licensing was also introduced in India as well as other member states. The TRIPS agreement put forward conditions for compulsory licensing such as previous attempts to receive a license from the patentee, fair compensation to the patentee, any non-assignable and non-exclusive use. The compulsory license granted should only be for the market of the member operating domestically granting such license.

1. 1. OBJECTIVE FOR COMPULSORY LICENSE GRANT TO THIRD PARTY

The primary goal of granting a CL is to allow the commercialization of patented invention as mentioned in act6 without any setback as well as to the extent possible to be reached for meeting the demands of the public health and public welfare. The monopoly in the market is bad for consumers as the dominance of one major player leads to less competition. The grant of license leads to more innovation with the help of technology transfer.

 

6 “Section-89 IPA”

 

CHAPTER 8- PATENT ABUSE AND REASONABLE REQUIREMENT OF PUBLIC

1. 1. PATENT RIGHTS ABUSE AND ITS WAYS

   Failing to work-

If the development of domestic industry is impeded by the production of product.

   Arbitrary terms on licensee-

Putting arbitrary terms on the licensee would result in no one taking the license.

   Declining licensing-

When the patentee refuses to grant a third party a license which wants to manufacture the product for a specific area.

   Putting restrictions on the use or sale after the patent expires-

This can be done by the patentee to limit the sale which will in turn reduce the production or try to find ways to get money that is more than the required amount as royalty.

 

1. 1. PROVISIONS FOR SATISFYING REQUIREMENTS OF THE PUBLIC WHICH ARE REASONABLE

    Rejection of the grant or refusing the grant –

The terms not being reasonable or refusing to grant to any third party a license so the invention is stuck with the low access rate to people.

   Imposing harsh conditions –

Imposing severe conditions which may result in jeopardising the existing market in the country. These conditions on grant would result in less expansion in the industry or trade.

   Commercialization –

Commercialization of the patented invention in the Indian territory is not being done to maximum limit.

CHAPTER 9- CONTROLLER

1. 1. ASPECTS CONSIDERED BY THE CONTROLLER FOR AN APPLICATION FOR COMPULSORY LICENSE

It is the Controller's responsibility to consider the particulars of –

    The invention’s nature.

    Since the patent was sealed how much time has elapsed.

    To fully exploit the invention, what are the steps used by the patentee or licensee.

    For the benefit of public what is the capability of the applicant to use the invention.

    If the CL is granted, the applicant's willingness to take the risk of providing capital and working the invention.

    When there is a national emergency or when commercialization is not done for the public or when there is extreme urgency or it is established that the patentee is anticompetitive steps.

1. 1. COMPULSORY LICENSING REQUIREMENTS AND PROVISIONS

(TERMS) The license needs to be put in motion with regard to the following particulars by the Controller7 -

   Royalty –

The compensation or remuneration in the form of royalties is needed to be paid to the licensor that is patentee or any person placed by him/her legally to obtain the benefits of the compensation. The amount is needed to be selected only after maintaining balance between the money spent by the licensor on the research and development of the invention.

 Profit –

The person being granted the license that is the licensee should take the opportunity to the fullest and make reasonable profits and give the selected amount to the licensor.

The invention should be worked fully.

  Price –

The pricing available to the public for patented invention by the licensee should be reasonable enough that the general public could afford it easily.

   Exclusivity –

The license granted is not limited to one party that is it is non- exclusive.

   Assignability –

The licensee cannot further assign the license to any other party.

   Time period –

The license will work for the time period it is allotted except for the case when a smaller term would be sufficed for the interest of the public.

   Place of Supply –

The place for supply of is the Indian market for the license granted to the licensee.

   Export –

With accordance with the terms of given in the licensee can also export the patented invention.

   Non-Commercial Use –

For the non- commercial use of the license, it could only be taken for semi - conductor tech.

   Non-competitive –

If the licenced invention is a remedy for a practise and is found to be non-competitive after a judicial and administrative process, the licensee may export the patented product if necessary.

   Import –

The countries where the patentee’s rights would be infringed, the licensee must not import invention or any product made from that process (patented).

   Central Government –

The central government has the powers to instruct the Controller at any time to enable the license of any patent product or product made from patented product to be imported after considering all the conditions.

 

 

7 “Section-90 IPA”

 

CHAPTER 10- SPECIAL PROVISIONS CL

1. 1. SPECIAL PROVISIONS RELATING TO COMPULSORY LICENSE8

   National emergency –

A situation like Covid-19 made the country come to its knees. It was a national emergency. Such diseases which become a national emergency can be a reason for grant of compulsory license. For example – Polio vaccine.

   Circumstances of extreme urgency –

When situation of extreme urgency arises in case where there is shortage of medical equipment required for the public.

   Public non - commercial use –

When the commercialization is not being done properly or the Woking of patent of not being done to the extent it can achieve to the public.

   Cross border licensing 9–

It is a form of compulsory licensing in which countries which are unable to or not capable enough to manufacture or produce goods related to pharmaceutical industry towards the health issue of the population. The license is given to produce and export the pharmaceutical to the person upon receipt to the application given in recommended form but the country to whom the pharmaceutical is to exported has allowed the export arising out of India.

1. 1. BOLAR PROVISION
2. Public health is directly proportional to the number of pharmaceutical manufacturing companies. Parallel importation is a way of getting cheaper medicines. Consumer needs cheap medicines which are as effective as the costly ones, the cheaper variants are called generic medicines. The parallel imported medicines are costlier than their generic

 

8 “Section-92 IPA”

9 “Section-92A IPA”

 

1. counterparts. So generic became a better alternative, bolar provision10 comes in play to protect generic pharmaceutical company doing research and development of the patented invention by making, constructing, selling or importing for the purpose of production and sale of generics immediately after the expiry of the patented invention.
   1. PARALLEL IMPORTATION

Grey market goods help the consumers and keeps the price of goods in check and prevents monopoly in market but have a negative impact on the owner of goods who first sold them

loses reputation. For example, a pharma company ‘A’ has patented drug in India. ‘A’ licensed its patent to ‘B’ in Australia. Here ‘A’ is Patentee while ‘B’ is Licensee and is authorized by patentee to see the drug. Now ‘C’ in India, buys the drug from ‘B’ and imports to India. Even though ‘A’ has patent rights in India and it can prevent ‘C’ from importing the drug in India, as principle of exhaustion11 of patent rights comes into picture (the Ip rights cease to exist after the first sale by the patentee). Since ‘C’ is buying and getting drug imported from ‘B’ where ‘B’ is duly authorized under the law to produce and sell or distribute the product,

importation of drug by ‘C’ in India shall not be considered as an infringement of patent rights12. The Patent (Amendment) Act of 2005 substituted "duly authorised under the law" for "duly authorised by the patentee."

 

1. 1. CROSS-BORDER LICENSING

When the AIDS epidemic was ravaging Africa and the most effective anti-retroviral drug combinations were patented and were being sold at a price which was unaffordable for the majority of population there. The Indian generic giant Cipla came forward with the proposition to manufacture the drugs at a cheaper rate. The African government procured the drugs from India (Cipla). This led to many infringement suits but were taken down due to global outrage and this in turn lead to changes at Doha Declaration which focussed on public health and working of patents. Patents needs to commercialized in order to meet reasonable Requirements of public. If a country has no capability to manufacture or insufficient

 

10 “Section-107A IPA”

11 “Article-6 TRIPS”

12 “Section-107A IPA”

13 “TRIPS Agreement- Para-6 Doha Declaration”

 

capability for pharmaceutical product a compulsory can be granted to manufacture and also export patented product to that country as it happened in the case of africa. The goal is to meet the requirements of the people and commercialize the patent and not exploit the right13.

 

CHAPTER 11-

PROCESS OF COMPULSORY LICENSE

1. 1. PROCEDURE TO COMPULSORY LICENSE GRANT TO THIRD PARTY

The procedure for filing an application for CL is governed by the Act in Section - 87. The procedure is given below:

    In form 17 the application for the grant of CL has to be filed by the interested party. There should be a clear mention of the particulars in the form 17 with the nature of applicant’s interest as well as the details on which application is made. The time period for limiting a compulsory licensing application is three years from the date the patent is sealed.

    Controller examines every fact and conditions of the application to determine at first impression whether the applicant built a case against the patentee.

    Being dissatisfied with the request, he would issue the notice to the applicant and provide a statement rejecting the compulsory licence. Within one month of receiving notice of rejection, a hearing can be requested with the controller by the applicant.

    Controller will make a decision at the end of the hearing. The conditions and terms towards the compulsory license grant are decided if the decision comes in the favour of the applicant. Royalties to be paid from the licensee to the patentee is determined by the controller. The further considerations to be taken are – the amount of investment done by the patentee in the invention, capability of the applicant to use the invention of the patentee, license terms and what selling price the patented article would have.

 Controller grants the applicant CL. If a licence holder applies for CL for the patented, the Controller may amend any existing license or cancel any existing license or rather grant license to the applicant.

 

13 “TRIPS Agreement- Para-6 Doha Declaration”

 

Grant opposition to compulsory licensing With the prescribed fee and within prescribed time a notice of opposition needs to be filed by someone who wishes to oppose the grant of compulsory license grant application. The applicant is notified and before deciding the case both parties are heard. The controller hears opponent as well as the applicant.

1. 1. COMPULSORY LICENSING TERMINATION

Compulsory licencing can be a great way to control the prices of patented inventions, check anti-competitive measures, meet public needs and demands, and implement other provisions. However, to be able to foster innovation, a compromise among both the societal interest & all the rights of the patentee must be struck.

CL may be terminated if the circumstances on which it was given cease to exist anymore. The person being the holder of that license can object to it. When after the grant of CL two years have passed objection can be raised by the central government or any person on the grounds of non -working of patents or not meeting the requirements of general population at price which are reasonable14.

1. 1. APPEAL/REVIEW

An appeal can be made to the Appellate Board as a result of the decision of the controller to grant or deny a license (compulsory). The Appellate Board can hear the appeal as follows-

    Compulsory license – Section - 84 (1)-(5)

    Revocation for non - working of invention - Section - 85

    Licensing of related patent – Section – 91

    Special Provisions for Compulsory License on notifications by Central Government – Section – 92; or

    Termination of Compulsory License – Section 94

 

CHAPTER 12- HEARING BOTH SIDES

1. 1. THE COMPULSORY LICENSING BENEFITS AND PROS

With the onset of covid India lost many lives this led to broken homes and that was just the first wave. The second wave made it worse and the graph of the covid related deaths increased. The need for research and development for the vaccines for felt by everyone. The pressure on the innovators to come up with a solution. The suggestion which was most prevalent was of a waiver to meet the public demand and put the production in full swing of all the related medical equipment and the drugs required for treatment. The distribution was also a major problem. The vaccine production was needed to be put in full drive for the fulfilment of the population of a billion people. The covid-19 is virus and virus mutate the study for the correct vaccine needs in-depth research. When the benefits of the research and development is shared with other parties so as to boost the production it would result in a change in the policy they adapt in the future related to any research.

 

 

1. 1. WHY C L MAY BE A BAD IDEA

While compulsory licensing appears to be flawless but the approach has some bugs being used as a mechanism for levelling the playing field. The premise of trade secrets is affected by the compulsory licensing provision. When reverse engineering is done or when there is production for any medical products which include emergency health products data is used which is the trade secret of a company or person.

1. 1. FINAL GOAL TO ACHIEVE CONSENSUS

Countries which were critical of the waiver are not supporting compulsory licensing. These are majority of the countries present in the developed world. Indeed, the critics have altered their notion and domestic laws have been tweaked to fulfil the same goal that is to satisfy the needs of the population one way or another. ¾ consensus is required for a TRIPS waiver.

 

1. “Section-94 IPA”

 

CHAPTER 13-

COMPULSORY LICENSES CASES IN INDIA

1. 1. BAYER CORP V NATCO PHARMA

India’s first license (compulsory), it laid down the foundation to the future of generics in India. Ninth march was the day the licensed was granted in the year 2012. The drug NEXAVAR by Bayer corporation was a medicine for cancer of the kidney and liver.

Exorbitant cost structure of the drug was available to the people which was around two lakh eighty thousand rupees. Natco Pharma offered to make a generic version of the drug. Natco’s plan was to sell it at nine thousand rupees so people from all economic backgrounds could buy it. The controller drafted the CL’s terms and conditions, which initially granted compensation in the form of royalties on profits at the rate of six per cent. Bayer was not convinced so they approached the intellectual property appellate board (IPAB) for the decision of the controller.

According to the controller, if three containers were required for three months supply for every cancer patient who was eligible, the Bayer Corp’s supply was less than the amount needed for the patients as the supply was only five hundred ninety- three boxes. This supply can only fulfil less than two hundred patients which was only two per cent of the required amount. Based on the observations, it was clear that the patients’ reasonable needs were not being met. It was also observed by the controller that the cost was also not reasonable to the general population for the drug. As the manufacturing was being done in Germany so the third point to be made was that the patented invention was not being worked in the Indian territory. It was determined that the compulsory license grant was valid.

1. 1. BDR- PHARMA INT V BRISTOL MYERS -SQUIBB CO. INTERNATIONAL PVT LTD

Compulsory licensing application was denied by the controller for the SPRYCEL. Sprycel is a drug used for cancer patients and contains chemical -DASTINIB. Patients having chronicmyeloid Leukaemia need the chemical dastinib. SPRYCEL is protected by patent15.

 

 

15 “IN203937”

for one lakh sixty -five thousand six hundred eighty for monthly supply for a patient and approximately nineteen eighty -eight thousand one hundred sixty. The drug by BDR was BDR Pharmaceutical claimed that the patentee charged INR 2761/- for each tablet sold, equating supposed to be for one hundred thirty -five per tablet and eight thousand one hundred for a monthly supply. Additionally, some of the patients would be given the drug for free.

 

However, the controller stated that an effort was not made to acquire license from the Bristol Myers on reasonability. Moreover, the BDR pharma couldn’t show the proposed working of patent if they were given an opportunity to have the license and also how it would be to public good. With the given arguments and the evidence provided were not enough to grant the license. So as a result, the request was denied.

 

1. 1. LEE PHARMA V ASTRAZENECA AB

For this instance, Lee Pharma sought mandatory licencing for the production and sale of a patented drug known as 'Saxagliptin,' which was protected in the name of AstraZeneca under patent number 206543. The drug 'Saxagliptin' was used to treat Type II Diabetes Mellitus.

AstraZeneca was approached in 2014 by the Lee Pharma for the license for the drug but Astrazeneca refused and provided reasons for not providing compulsory licensing. Lee pharma mentioned to AstrZeneca that drug (Saxagliptin) pricing was not reasonable for the general public. Be that as it may both of them due to miscommunication did not follow any conversation after that. After that controller of patents was approached by lee pharma.

Controller was presented with evidence which pointed towards the lee pharma attempt towards acquiring the license but failed. The application and data suggested the lack of working (not meeting reasonable requirements) but there were substitutes available to the market as well. The argument of lee pharma failed when their proposed price bracket by them was more than the price including the imports and the case went downhill. Further the

inability to show the number of patients who needed the drug but couldn’t get it. As a result, the CL was denied.

 

 

 

CHAPTER 14- THE END

1. 1. CONCLUSION

No matter how flat you make a pancake it always has two sides. The public good and the safeguard of rights of the patent holder seems to have conflict with each other. The grant of compulsory licensing should not be used without due diligence on the part of the higher authorities allocating it. The fear of the grant of compulsory license may deviate the innovation and modernisation by the innovators and inventors which would have been possible if the grant was not given to anyone. The evergreening is not allowed in India which limits the protection of patents and therefore leads to reduction in profits of the pharma companies. This keeps the prices down and helps people afford life-saving drugs in the developing world as well the developed world because the economic gap between the population exists in every country. The burden on the companies or inventors is to strike an equilibrium with cost put on by research and development of that product and based on the level of purchasing power of the common man of the country set a price which earns them profit. The median approach of the Indian patent law provides safeguard to the rights of the patent holder as well as public good. One should not forget that compulsory licenses are not royalty-free, the makers are compensated fairly. Indian competition law may also help in ensuring the allocation of compulsory license as the case covid when there said to be multiple options for vaccines but in the unusual times like covid the companies can run independent of each other which makes them dominant. The Sars-virus Covid-19 16made us realise the importance of innovation and speedy production of vaccines. Technology transfer played a big role in disclosure of required information. As India becomes a developed country in the

coming years, we may see a change in legislations which would be more favourable to the inventors.

 

 

 

 

 

16 “TRIPS-Agreement for Prevention, containment & treatment of Covid-19, WTO”

 

 

1. 1. BIBLIOGRAPHY

    Indian patent act

    wto.org

    mondaq.com

    quickcompany.in

    bananaip.com

    lawyersclubindia.com