What is compulsory License?

In the field of Intellectual Property Rights, all the properties like patents, designs, copyrights, and trademarks are commonly used in every country. In the field of patents, compulsory licensing is becoming one of the most commonly used tools to use the invention. A compulsory license is a tool to ask the government to use the patented product or process without the explicit consent of the patent holder. This license overrides the right of the grantee to enjoy the exclusive right over his patent for 20 years. Not every person can ask for the compulsory license, there are some conditions and circumstances which should be met to take the compulsory license for a patent article.

The reason behind giving the compulsory license to other people interested in the field is to safeguard the rights of the inventor by facilitating the society.  Before giving the compulsory license to the third person, the government imposed some restrictions on third parties so that the inventor of the patent must not get hurt and on the other hand, the invention should be used for the benefit of the public.

In this article, we will discuss what is compulsory license and how you can take a compulsory license for a patent product or process without the explicit consent of the patent holder. After reading this article, you will gain a comprehensive understanding of the role of compulsory licensing in shaping the ecosystem and promoting the public interest and economy.

What is a compulsory License (CL)?

The Patents Act of 1970 covers the Compulsory License. According to the act, the CL is a statutory authorization granted by the controller of patents to a third party to exploit the patented article without the consent of the real owner of the patented invention. The reason behind giving this license to third parties is to maintain the balance between the exclusive rights of the patentee and the public interest. Usually, this license is given in cases where the patented invention is not being adequately utilized.

Section 84 of the Patents Act

As per section 84 of the Patents Act, says that any person interested can apply for the compulsory license after the 3 years of the grant of a patent for the invention. Here, the interested person is the person who is working in the same field to which the patent is related.

The person who is going to file the request for the CL must file Form 17 by paying the prescribed fee.

Conditions to Obtain a Compulsory License

There are some conditions for Issuing a CL. The person who is going apply to obtain the compulsory license should take care of some conditions which are:

Expiration of 3 years

The person interested in obtaining the license must wait for three years from the date when the patent was granted. This period is given to the grantee so that he can use his invention to put this into commercialization. But if the person fails to do so, then the third person interested can apply for it.

Efforts to obtain a license from the Patentee

The person who is going to apply for the CL must ask the patentee to give him the license for making, using, selling, or importing the patented product or process.

These conditions are made for the benefit of the inventor so that if he wants to commercialize his product then he can do so within this period.

It must be noted that these conditions are valid only in normal circumstances. But in the case where there is:

  • National emergency
  • Extreme urgency
  • Vital public health needs

The government can directly give the compulsory license to third parties for the mass production of the product. Other than these circumstances, the above conditions will be checked.

Grounds to Obtain a Compulsory License

Any person interested after following the conditions to apply for the CL can apply on any of the following grounds:

Public Demand

The public demand for patented inventions is not being satisfied.

Affordable Price

The invention is not available at an affordable price.

Working in the territory

The patented invention is not working or is not operational in the territory of India.

These are the grounds on which the interested person can apply for the compulsory license. if any of the conditions are not fulfilled by the Patentee, then the controller of the Patents can grant the compulsory License. It should be kept in mind that the patent law also follows the rule of justice which means that the controller will listen to the side of the patentee as well. after losing the side of the patentee, if the controller thinks that there is a need to grant the license for public welfare, only then he will grant the license to the other party after checking all the aspects of the case. 

Forms and Fees Related to Compulsory License

There are different forms related to the compulsory license which can be used in different situations.

Form 17

 The main form to apply for the CL is From-17 with fees of 2400 for a natural person. The fee for other than natural persons is 12000.

Form 19

This form is related to the application for revocation of a patent for non-working. As per section 85 of the Patents Act, if the person, who has obtained the compulsory license fails to start the work for commercial purposes on that patent for two years, then any other interested person or the government can use this form to revoke such CL of that person. The controller of the patent can also take the action to revoke the CL after the expiration of two years. The fee for this form is also 2400.

Form 20

This form is for the revision of the terms and conditions of the compulsory license. As per section 90, the license holder and applicant of the patent make the terms and conditions for the CL. Sometimes, it may happen that the conditions made before the work started do not comply with the situation. In such cases, this form helps the person who had the license can apply for the revision of these terms and conditions within one year counted from the date when he started the work. This form can be applied only one time but the person. The fee for this form is also 2400.

Form 21

This form is related to the termination of the Compulsory license. As per section 94 of the act, when the patentee is capable of fulfilling the grounds on which the license holder had taken the license, he can file this form to terminate the license. After receiving this form, the controller of the patent will send the notice to the license holder and set the harmony between both parties so that no one could be at a loss due to the termination of such license.

Natco Pharma vs Bayer Corporation

Natco Pharma vs Bayer Corporation is a landmark case related to the CL. In this case, the first compulsory license was granted in India.

This case is related to Natco Pharma which was a generic pharmaceutical company and another company Bayer Corporation which was a multinational pharmaceutical company.

Bayer Corporation held a patent for a cancer drug called Sorafenib Tosylate, marketed under the brand name Nexavar. The drug was used in the treatment of kidney and liver cancers. However, Bayer priced Nexavar at a level that made it unaffordable for most patients in India. The cost of the medicine was 2.85lakh for a month.

Then Natco Pharma asked Buyer to grant the license so that they could make the same medicine in India at the lowest price which was 8800 rupees per month. But Natco Pharma refused it.

After 6 months, Natco Pharma files the request for the grant of a compulsory license in the Indian Patent Office seeking a compulsory license to manufacture and sell a generic version of Nexavar. Natco argued that Bayer’s pricing of the drug made it inaccessible to the majority of patients in India, and they were willing to sell their generic version at a significantly lower price.

Decision of Court

After a thorough examination of the case, the Controller of Patents granted the compulsory license to manufacture and sell the Nexavar on March 2012. This decision was based because Bayer was selling this medicine at high prices which was not affordable by the people.

Conclusion

In conclusion, we can say that the compulsory license plays a major role in balancing the interests of the patentee and the public. It allows the utilization of patented invention in situations where the patentee is not providing the invention at an affordable price, not providing its services in the territory or not fulfilling the needs of the public at large. The process to gain this license may not be easy but if the person interested wants to gain this license, then he should follow all the procedures and needful timelines and conditions.

It should be noted that the license provided by the controller of patents is not exclusive and the person who got the license cannot further transfer this license to another person. You can give your view in the comments!

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