How to Apply for a Compulsory Licence for a Patented Medicine in India
A patented medicine priced beyond the reach of the patients who need it is the situation the Patents Act, 1970 addresses through three mechanisms, only one of which is an application to the Controller. This guide sets out how to apply for a compulsory licence under the Act, in the order the steps arise, and where the two executive routes sit beside it. The exercise is evidential before it is legal: the provisions are short, and what decides an application is the material assembled on supply, price and local working before anything is filed.
Step 1: Confirm the Three Year Period Has Run and That You Can Apply
Section 84 opens the door at any time after the expiration of three years from the date of the grant of the patent. The period runs from grant, not from filing or publication, and the difference can be several years. Take the date from the register.
Confirm also that you are a person interested. That is wider than a competitor and covers a person promoting research in the field, but it is not unlimited, and standing is the first thing a patentee will contest.
Step 2: Choose Which of the Three Grounds You Rely On
Section 84 provides three grounds and an applicant may rely on one or more: that the reasonable requirements of the public with respect to the patented invention have not been satisfied, that the invention is not available to the public at a reasonably affordable price, or that it is not worked in the territory of India.
The grounds are not interchangeable in terms of proof. Reasonable requirements turn on supply against demand, affordability on price against the paying capacity of the public rather than of the wealthiest patients, and non-working on the absence of local manufacture, which import does not cure. Decide which ground the evidence supports before drafting.
Step 3: Assemble the Evidence Each Ground Requires
Section 84 directs the Controller's attention. In considering an application he is to have regard to the nature of the invention and the time elapsed since the patent was sealed, to the applicant's ability to work the invention to the public advantage, and to the applicant's capacity to take the risk of providing capital and working the invention.
The section also defines when the reasonable requirements of the public are deemed not to have been satisfied, across clauses covering refusal of a licence on reasonable terms, restrictive conditions, improper exclusivity, inadequate commercial working in India and the hindering of manufacture by import. Map the evidence onto those clauses individually rather than pleading the ground in the abstract.
Section 83 is the interpretive backdrop and should be cited. It records that patents are not granted merely to enable a monopoly for the importation of the patented article, and that they are granted to make the benefit of the invention available at reasonably affordable prices to the public.
Step 4: Approach the Patentee for a Voluntary Licence First
Among the matters the Controller is to consider is whether the applicant has made efforts to obtain a licence from the patentee on reasonable terms and conditions. That is not a formality. Write to the patentee, make a concrete proposal on volume, territory and royalty, allow a real period for a reply, and keep the correspondence. An applicant who has made a serious offer and been refused arrives with the refusal as part of its case.
Step 5: File the Application With the Controller
An application is made to the Controller in the manner provided by Rule 96 of the Patents Rules, 2003. It must set out the ground relied on and the facts supporting it, and it should carry the evidence rather than promise it. Rule 97 deals with the position where no prima facie case is made out, so the application has to stand on its own face.
Step 6: Expect Publication, Opposition and a Hearing
Where the Controller is satisfied that a prima facie case has been made out, Section 87 applies. The applicant serves copies of the application on the patentee and on any other person appearing from the register to be interested, and the application is published in the official journal.
The patentee or any other person desiring to oppose may then give notice of opposition under Rule 98 of the Patents Rules, 2003, within the prescribed time or such further time as the Controller allows. The notice must state the grounds, and the Controller then hears both sides before deciding. Plan for a contested hearing from the outset.
Step 7: Be Ready on Terms and Royalty
If the Controller is satisfied on one of the grounds, the licence is granted upon such terms as he may deem fit. Section 90 governs those terms, and by the operation of Section 92 applies equally to a licence granted on a notification. Come to the hearing with a costed proposal rather than leaving the terms to be constructed for you.
The leading Indian authority remains instructive. In Bayer Corporation v. Union of India, decided by the Bombay High Court on July 15, 2014, a licence over the anti-cancer drug sorafenib tosylate was upheld on all three grounds and the royalty fixed at seven per cent of net sales. The price contrast there, between a monthly cost of about Rs 2,84,000 and the licensee's proposed Rs 8,800, is the order of disparity on which affordability was established.
The Two Routes That Do Not Start With an Application
For a medicine in acute shortage the Controller route is not the fastest. Section 92 permits the Central Government, in circumstances of national emergency or extreme urgency or in a case of public non-commercial use, to declare as much by notification in the Official Gazette, after which the Controller grants licences on terms he thinks fit, securing the lowest prices consistent with the patentees deriving a reasonable advantage. Where the Controller is satisfied that such a circumstance exists, including a public health crisis of the kind the section names, the opposition procedure is dispensed with and the patentee is informed instead.
Section 100 is different again. It permits the Central Government, and any person it authorises in writing, to use an invention for the purposes of Government, on agreed terms or in default on not more than adequate remuneration, and it expressly allows goods so made to be sold on a non-commercial basis. There is no application and no opposition. Where the object is supply to patients, this is the provision to put to the Union.
Common Pitfalls to Avoid
Counting the three years from the wrong date: The period runs from grant. An early application is dismissed without reaching the merits.
Pleading affordability by reference to the wrong public: The question is availability at a reasonably affordable price, not whether some patients can pay.
Treating import as working: The third ground is directed at working in India. Import figures are not an answer to non-working, but they are not proof of it either.
Reciting the request for a voluntary licence: A pro forma letter sent to complete the file is visible for what it is.
Filing a thin application and hoping to build the case later: Rule 97 allows the Controller to stop where no prima facie case is made out. The application is the case, not an introduction to it.
Ignoring termination: Section 94 permits termination where the circumstances that gave rise to the licence no longer exist. A licence is not necessarily permanent, and investment decisions should reflect that.
Key Statutory Provisions
Section 84 of the Patents Act, 1970: Compulsory licences. After three years from grant, any person interested may apply on the ground that the reasonable requirements of the public have not been satisfied, that the invention is not available at a reasonably affordable price, or that it is not worked in India.
Section 83 of the Patents Act, 1970: General principles governing the working of patented inventions, including that patents are not granted merely to enable a monopoly of importation.
Section 87 of the Patents Act, 1970: Procedure where a prima facie case is made out: service, publication, opposition on stated grounds, and a hearing before decision.
Section 90 of the Patents Act, 1970: Terms and conditions of a compulsory licence.
Section 92 of the Patents Act, 1970: Compulsory licences following a notification in circumstances of national emergency or extreme urgency or in a case of public non-commercial use, with the opposition procedure dispensed with where the Controller is so satisfied.
Section 94 of the Patents Act, 1970: Termination where the circumstances that gave rise to the licence no longer exist and are unlikely to recur.
Section 100 of the Patents Act, 1970: Government use, on agreed terms or in default on not more than adequate remuneration, with an express right to sell goods so made non-commercially.
Rules 96 to 98 of the Patents Rules, 2003: The manner of applying, the position where no prima facie case is made out, and notice of opposition.
Sources and References
The Patents Rules, 2003, Office of the Controller General of Patents, Designs and Trade Marks
Bayer Corporation v. Union of India, Bombay High Court, July 15, 2014
Patents Act, 1970, Sections 83, 84, 87, 90, 92, 94 and 100; Patents Rules, 2003, Rules 96 to 98
Disclaimer: This article is for informational purposes only and does not constitute legal advice. Readers should consult a qualified legal professional for advice specific to their circumstances.
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