Patents are granted to encourage inventions and grant certain rights to the patent holder for his innovation. Patent restricts others to make, use, offer for sale, sale or import the patented product. Patent right locks the functionality aspect and restricts the rights of the patent owner. Patent is a time-limited monopoly which is granted from the date of the first filing for twenty years.
The Patent Act in India ensures that this monopoly does not harm the competitive structure of the market so that no harm is caused to public welfare. This is done through Compulsory Licensing by the government enshrined in Section 84 of the Indian Patent Act, 1970. Any interested person can make a request to the Controller, after the expiry of three years from the date of grant of a patent.
Compulsory licenses are generally defined as “authorizations permitting a third party to make, use, or sell a patented invention without the patent owner’s consent. Compulsory licensing should be considered as a last resort and it is required that the applicant should first make an attempt to get a voluntary license from the patentee itself. When the applicant is not able to procure the same within the prescribed period (6 months) then the applicant can file for compulsory licensing. In the BDR Pharmaceuticals International Pvt Ltd case against BMS, Controller General (CG) unequivocally said that before going to the merits of the case the threshold requirement of establishing a prima facie case must be satisfied.
Further, CG held that BDR had not really made any credible attempt to procure a license and therefore could not be said to have satisfied the statutory requirement that the applicant must have negotiated in good faith for 6 months at least. Pursuant to section 87 of Indian Patent Act, 1970, on receiving the application, the Controller should consider the evidence therein to determine whether a prima facie case is made out on the basis of the facts disclosed in the application.
The landmark case of Natco v. Bayer in 2012 is the first where a compulsory license was granted. The case opened a plethora of questions with regard to India’s patent policies. The decision of the case, which came in less than 6 months, reflected that instead of having a very strict IP protection regime, the interest of public at large will be of paramount importance. However, the decision also encountered severe criticism from the large segment of multinational companies internationally. It was alleged that despite being a member of the WTO and an important global trading partner, India has systematically failed to interpret and apply its IP laws in a manner consistent with recognized global standards. In addition to this, potential investors also see a growing trend of anti-IP developments in India which is creating significant uncertainty in the market.
The main objective of Patent law in India is to encourage inventions and incentivize innovation. But this does not mean that the patent holder can monopolize the market structure with his innovation. It is, therefore, important to determine whether compulsory licensing takes away the rights of the patentee. The Indian patent law gives the patentee 3 years to exploit his innovation in his own way. But, the interest of public at large is given paramount importance in such exploitation. Thus, compulsory licensing in India is looked at very seriously and critically. It is also required to ponder upon some ancillary issues related to compulsory licensing.
In case any patentees try to go scot-free by taking the defense under section 61 of Competition Act, 2002, some provisions of the Patent Act should be there in order to prevent them from such easy lee-way. The provision should be interpreted in a manner which will make the act of entering into anti-competitive practice culpable under the Patent Act. India is in its nascent stage, however, the amount of development going around in the concerned area is reflective of the fact that India is trying to fulfill all its International Commitments. It will take some time to establish India’s firm stand in the international scenario but as of now the growth in the field of compulsory licensing is unprecedented.