A Short Note on Compulsory License Provisions and Interpretation
In India, the concept of ‘compulsory license’ vis-à-vis granted patents is dealt with under Chapter XVI of the Patents ct, !"#$ %hereinafter the ct&' (he condi conditio tions, ns, which which are are statut statutor orily ily re)u re)uir ired ed to *e ful+ll ful+lled ed,, in order order for a compulsory license to *e granted and the process related to the said grant, are covered under ections . to ". of the ct' /etails of such ections and the related 0ules are contained in Annexure A' ccording to ection . of the ct, any person interested ! notwithstanding that he is already the holder of a license 1 under the patent may ma2e an application to the Controller for grant of a compulsory license at any time after the e3piration e3pirati on of three years from the date of grant of a patent' 4 n application for compulsory license can *e +led on any of the following grounds.5 !' the reasona*le reasona*le re)uire re)uirements ments of the pu*lic pu*lic with respect to the patented patented invention have not *een satis+ed6 or 1' the patente patented d inven inventio tion n is not not avail availa*l a*le e to the the pu*li pu*lic c at a reaso reasona na*l *ly y a7orda*le price6 or 4' the patented patented invention invention is not not wor2ed wor2ed in the the territory territory of India' India' ection ection .%#& .%#& enumerat enumerates es the situatio situations8co ns8condi ndition tions s when the reason reasona*le a*le re)uirements of the pu*lic are deemed not to have *een satis+ed' ! ection .%4& re)uires the applicant to set out details pertaining to the nature its interest 1 ection .%1& 4 ection .%!& . i*id
9hile 9hile consi consider dering ing an appli applicat cation ion for grant grant of a comp compul ulsor sory y licens license, e, the Controller ta2es into account : • • • • • •
the nature of the invention6 the time which has elapsed since the grant of the patent6 measures ta2en *y the patentee for wor2ing the patented invention6 the a*ility of the applicant to wor2 the invention6 the capacity of the applicant6 whether the applicant has made e7orts ; to o*tain a license from the patentee on reasona*le terms and conditions and that such e7orts have remained unsuccessful after passage of reasona*le time period <'
9hen on an application application for compulsory license, the Controller Controller is not satis+ed as to the e3istence of a prima facie case, he shall notify the applicant and unless the applicant re)uests for a hearing in the matter, within one month from the date of such noti+cation, the Controller shall refuse the application' 9hen the Controller is satis+ed that a prima facie case e3ists #, he shall direct the applicant to serve copies of the application upon the patentee' =nce the appli applicat catio ion n is served served on a paten patentee tee,, the paten patentee tee can give give a notice notice of opposition to the Controller' (his notice of opposition shall state the grounds on which the application is opposed *y the patentee'
Pharmaceuticals v Bristol Myers Squibb Co., CL Appl Appl no. 1/ 2013 In this ; BDR Pharmaceuticals case, an application for compulsory license was refused to be entertained by the Controller on the round that reasonable efforts for see!in a "oluntary license ha"e not been made by the Applicant. #urthe #urther, r, it is pertinen pertinentt to note note that that the the proviso specifically pro"ides that such re$uirement is not applicable in case of emerency, abuse of patent etc.
< ection .%<&%iv& >3planation provides provides that a time of period of < months will *e regarded as reasona*le time period
# ection # details the procedure
(he Controller will provide a hearing to *oth the applicant and the patentee' /uring such hearing, it is open to *oth the parties to ma2e su*missions and the patentee can provide an e3planation or ela*orate upon reasons as to why the patented invention has not *een wor2ed in India despite e3piry of 4 years after grant ' fter the hearing, the Controller may or may not grant a compulsory license' If a compulsory license is granted *y the Controller and despite the same a pate patent nted ed inve invent ntio ion n has not not *een *een wor2 wor2ed ed in Indi India a or the the reaso easona na*l *le e re)uirements of the pu*lic has not *een satis+ed or the patented invention is not availa*le to the pu*lic at a reasona*ly a7orda*le price : an application can *e moved see2ing revocation of the concerned patent' " (he purpose!$ of granting compulsory license in India is to see that patented inventions are wor2ed on a commercial scale in the territory of India and that the the inte interrest est of any any pers person on wor2 wor2in ing g or deve develo lopi ping ng the the inve invent ntio ion n is not not pre?udiced' comp compul ulso sory ry lice licens nse e can can *e gran grante ted d *y noti noti+c +cat atio ion n *y the the Cent Centra rall @overnment !! in circumstances of5 !' national emergency6 or 1' e3treme urgency6 or 4' in case of pu*lic non-commercial use' (he procedures procedures for o*taining o*taining a compulsory compulsory license need not *e complied with in the a*ove mentioned conditions which may arise, including pu*lic ection < can *e relied upon *y a patentee to see2 an ad?ournment " ection ; !$ ection " !! ection "1
health crisis, relating to c)uire Immuno /e+ciency syndrome, Auman Immuno /e+ciency Virus, tu*erculosis, malaria or other epidemics'
CONCLUSION
Compulsory license is granted only in e3tremely rare circumstances where a patentee has grossly failed to wor2 the patented invention in India or in case of national emergency in India or a*road %to a country where an applicant may want to e3port patented medicine&' Burther, it is of importance to note that while deciding the issue of grant or non-grant of a compulsory license, due hearing is given to a patentee and if a patentee is a*le to esta*lish that it was una*le to wor2 the patented invention due to genuine and *ona+de reasons *eyond its control, ideally no compulsory license is granted' (hus, it is only when an element of a*use of patent monopoly or national emergency is attached with non-availa*ility of a patented invention to the pu*lic at large, that a compulsory license will *e issued' 9e would also li2e to point out that the Patents ct, !"#$ speci+cally provides that : a& Compulsory icense will not *e granted to an applicant solely for the purpose of importing a patented invention' (his esta*lishes that the *asic intention *ehind grant of compulsory license is to ensure that patent is wor2ed in India and that a patented invention is availa*le to the pu*lic at large' (Sections 89 and 9 o! the Act" *& It is also open for a patentee to +le an application see2ing termination of a granted compulsory license, if it is a*le to esta*lish that su*se)uent to the grant of the compulsory license, the circumstances under which the same was granted no longer e3ist and that they are unli2ely to recur' (Section 9#"
s a result, only in circumstances where a patentee despite passage of three years after grant of a patent in respect of life saving drugs is una*le to provide the su*?ect medicine %either *y way of importation or *y way of local manufacturing& to the pu*lic at large that a compulsory license is granted' lso while deciding the )uestion of a7orda*ility and availa*ility, initiatives ta2en *y a patentee relating to patients access programs etc' are always ta2en into consideration' In Bayer Vs. Natco compulsory license case, it has *een clearly stated that imports can also constitute wor2ing provided there are circumstances which necessitate the imports' Aowever, mere imports for no reason e3cept to 2eep the prices high can prove detrimental to patentees' (here are recent licensing models, which have proved to *e successful in this regard' In fact, in the case of Bayer Vs. NATCO a compulsory license was granted in view of the fact that merely 4.$ units of %<$ ta*let pac2& pac2s of De3avar were imported in India *y Eayer Corporation over a period of two years' %/etailed analysis is contained herein *elow& (he +rst Compulsory icense %C& was granted to Datco Pharma td' %the applicant&, a generics drug company *ased in Aydera*ad, India for Patent Dum*er
1!;#;
covering
‘orafeni*
(osylate’
a
proprietary
drug
manufactured *y Eayer Corporation %the patentee& and sold under the name ‘De3avar’' s elucidated *y the Controller himself, this was the +rst case of compulsory licensing in India and that there were no precedents to guide the (ri*unal' Compulsory icense is a provision under the (0IP %rticles 4$ and 4!& to ‘prevent the a*use of patent rights’' It is an involuntary contract, enforced *y the @overnment, *etween a willing *uyer and an unwilling seller' It is also recogniFed *y the Paris Convention %rticle ; %&&' In Bayer Corporation v Union of India and others 6 1$!. Indlaw GHG !" %challenge to the Compulsory icense& the Court dwelled upon what is reasona*le re)uirement of pu*licJ and noted5
•
•
•
•
(he o*ligation to meet the reasona*le re)uirement of the pu*lic is of the patent holder alone either *y itself or through its licensees6 (he petitioner %Eayer& in its wor2ing statement +led with the Controller on yearly *asis did not include CiplaKs sale of the infringed patented drug as participating in meeting the reasona*le re)uirement of pu*lic6 Luestion of reasona*le re)uirement of the pu*lic is to *e determined on the *asis of evidence led *y the parties *efore the authorities6 InfringerKs )uantity of goods could not *e ta2en into account *ecause it could stop on any day' It is only where the patent holder accepts the infringerKs participation in the mar2et and grants him defacto license could the infringerKs supplies *e ta2en into account6
Burther dwelling upon if reasona*le re)uirement of pu*lic was *eing met to an ade)uate e3tent, it stated that ade)uate e3tent5 •
•
/epends on the nature of articles and would vary for lu3ury articles and medicines' In respect of medicines, the ade)uate e3tent test was purported to *e !$$M i'e' to the fullest e3tent'
In the same ?udgment reasona*ly a7orda*le priceJ is noted as5 •
•
(he reasona*ly a7orda*le price to *e arrived at on the *asis of the evidence led *y the parties of their respective prices' (he o*ligation of the authorities under the ct was with regard to grant, control and revocation of patent and not price determination of the patented invention6 Patient ssistance Program could not *e used to arrive at reasona*ly a7ord price as PP was a charity' (he decision whether or not to e3tend the charity would *e sole prerogative of the donor i'e' the petitioner6
=n the issue of pu*lic interestJ the Court held that5 •
(he law of patent is a compromise *etween interest of the inventor and the pu*lic'
•
Pu*lic interest is and should always *e fundamental in deciding a lis *etween the parties while granting a compulsory license for medicines8drugs'
=n the 9or2ing 0e)uirementJ, the Court held that5 •
•
•
9or2ing re)uirement to *e decided on a case-to-case *asis6 9hen a patent holder is faced with an application for Compulsory icense, it is for the patent holder to show that the patented invention8 drug is wor2ed in the territory of India *y manufacture or otherwise6 Ganufacture in all cases may not *e necessary to esta*lish wor2ing in India6
In Novartis AG Vs Cipla Ltd %order dated Nanuary ", 1$!; in I'' Do'1.<481$!. ID C%=& 4!181$!.& the Court held5 •
•
•
•
It is not essential that the patent must *e wor2ed *y manufacturing the patented product in India' (he ct %Patent Act & did not mandate that no patent protection would *e granted to a patentee unless the local manufacture is underta2en' Don-wor2ing of a patent could not *e ta2en as a defense to a suit of infringement in a Civil Court' (he appropriate forum for ta2ing up the issue of non-wor2ing of a patent would *e to see2 compulsory license *efore the relevant authority'
CASE LA ANAL!SIS BA!E" CO"#O"ATION v. UNION O$ IN%IA& CONT"OLLE" O$ #ATENTS AN% NATCO #'A"(A (OA$%&$''$P)$*U*"
BC(5 G8s' Eayer Corporation %Eayer&, invented a drug called Korafeni*K %Car*o3y u*situted /iphenyl Hreas& useful in the treatment of advanced stage liver and 2idney cancer in the !""$s' (he +rst patent was applied in the HP(= in !""" and su*se)uently a PC( international application was +led in 1$$$' Patentee entered the national phase in India in 1$$! and was granted a patent in 1$$ in India' (he /rug was launched in 1$$; under the trade name De3avar' G8s' Datco Pharma td' %Datco& developed a process to manufacture this drug and a license from drug controller general of India for manufacturing the drug in *ul2 and for mar2eting it in form of ta*lets in pril 1$!!' (he drug is not a life-saving *ut a life e3tending drug' In the case of 2idney cancer, the life of a patient can *e e3tended *y .-; years, while in the case of liver cancer the life of a patient can *e e3tended *y a*out <- months' (he drug has to *e ta2en *y the patient throughout his lifetimes and the cost of the therapy is 0s' 1,$,.18- per month and 0s'44,<;,!4<8- per year' Datco +led an application for compulsory license in Nuly 1$!! under ection .%!& of the Patents ct and 0ule "< of the Patent 0ules' Previously Datco had approached Eayer for a voluntary license which had *een refused' Datco proposed to sell the drug at a price of 0s'$$8- for one month therapy as compared to the price of a*out 0s'1,$,.18- charged *y Eayer' Case +e!ore the Controller ,eneral o! Patents
Datco *y a letter dated
|
Eayer su*mitted that the purpose *ehind ec .%!&%a& is to enhance access to patented inventions' Aowever, access to patented invention is not identical to a7orda*ility and cannot *e considered to *e on the same footing' Aence, there e3ists no case for the grant of compulsory license to the Datco' The Controller concluded that the demand for the patented drug was not being met by Bayer. The argument of Bayer that its sales along with that of Cipla satised the reasonable requirements of the public was rejected by the Controller, as the application for the compulsory license was led against Bayer and it was their conduct which was releant in the present case. !urther, Bayer had tried to preent Cipla by preferring an infringement suit against them. This shows that Bayer is adopting two"facedness by ta#ing one stand before this tribunal and another stance before the $elhi %igh court before which the case of infringement is pending. &ection '( of the )ndian Patent Act was analy*ed with respect to the present case and the Controller stated that the patent Act proides that the patent should be aailable to the +public+ at a +reasonably aordable+ price. Balance needs to be created between the cost of -$ and manufacture on one hand and reasonably aordable price on the other. )t was concluded that the price of the patented drug was unaordable to a large section of the )ndian population and as the drug was an essential life enhancing drug. The Controller held that the proision of wor#ing has to be considered in the conte/t of the principles laid down under &ec '0 12a3 and 2b34 of the Patents Act. Accordingly, it was held that +minimal wor#ing is no wor#ing at all and the inention must be wor#ed to the fullest e/tent to escape from the rigours of &ec '(2532c3+. %e rejected Bayer6s argument that +wor#ing of the inention+ as mentioned under &ec '(2532c3 means wor#ing on a commercial scale only. 7ere importation of patents cannot amount to wor#ing of patented inention under &ec '02b3.
-easonable requirements of public as mentioned under section '(2532c3 is a separate ground for compulsory license which was not being met by Bayer. %ence, the Controller granted a compulsory license in faour of 8atco. )n granting the compulsory license to 8atco, the Controller too# account of the fact that Bayer had priced 8e/aar at -s. 9.': la#hs 2appro/. ;&< :'==3 for a one month>s course, whereas 8atco planned to sell its generic ersion, for just -s. ','== 2;&<5'53. )t also too# account of the fact that 8atco had underta#en to maintain its price, not to manufacture for e/port, and to supply the drug free of charge to ?== desering and needy patients each year. Bayer>s admission that only 9@ of #idney and lier cancer patients were able to access the drug and that the drug was imported and not being manufactured within )ndia, went against it. 8atco was granted compulsory license for the manufacture of the $rug &orafenib subject to the following conditions The price of the drug sold by the licensee 28atco3 shall not e/ceed -s.''== for a pac# of 59= tablets, required for one month6s treatment. 53 The licensee shall hae the right to manufacture the drug only at its own manufacturing facility and shall not outsource the production. 93 The license was granted solely for the purpose of ma#ingmanufacture, using, oering to sell and selling the drug coered by the patent for the purpose of treating %CC and -CC in humans within the territory of )ndia. 03 The license granted was non e/clusie and non assignable. (3 -oyalty rate of ?@ of the net sales of the drug on a quarterly basis was /ed. :3 The license was granted for the balance term of the patent.
APP-AL .-/O0- )1- IN)-LL-C)UAL P0OP-0)2 APP-LLA)- .OA03
=n !.th eptem*er 1$!1, Eayer appealed against the order of the Controller and to stay the grant of the compulsory license to Datco' =ne of the main issues focused *y Intellectual Property ppellate Eoard %IPE& was the importance of the role of CiplaKs presence in the mar2et as a ground for revocation of the compulsory license granted *y the Controller and the other was that of pu*lic interest' It was su*mitted *y Eayer that the word wor2J in '.%!&%c& includes import and not necessarily local manufacture' ccording to the ppellant even import of small )uantity and a de minimis proof of wor2ing would suOce' It was further stated that the appellant could not have started wor2ing at once, as they had to get the approval of the authorities, *rea2 the mar2et resistance and win the con+dence of the oncologists' Bor the purpose of the stay petition the IPE analyFed ec'.%#& and ec' <%1& and accepted that the Eayer’s imports amounted to wor2ingJ' It was contended *y Eayer that the re)uirements under ec . %!&%*& will not arise if the drug is made availa*le in the mar2et at reasona*ly a7orda*le price and not necessarily *y the patentee' It was su*mitted that the sales of the ppellant together with the sales of Cipla was satisfying the pu*lic re)uirement' )n this regard the )PAB held that Bayer had itself conceded that it was because of Cipla that the public requirement was being met. Then again Bayer had accused Cipla of preenting it from wor#ing the patent in the )ndian mar#et. )n the )PAB6s opinion these two contentions were inconsistent with each other and it was held that the decision of the Controller was correct by not ta#ing Cipla>s presence into consideration. )t was for the appellantpatentee to show that it has fullled the obligation under the grant of patent and therefore, its right should be protected.
nother ground that was put forth *y Eayer was that Datco did not seriously as2 Eayer for a grant of voluntary license' (he ct nowhere states any
particular time period for which negotiations have to go on *efore a party can +le an application for the grant of a compulsory license' (he ct only states that the Controller shall ta2e into account whether the applicant has made e7orts to o*tain a license from the patentee on reasona*le terms and whether the e7orts have failed within a reasona*le period as Jthe Controller may deem +tJ' Aence, it is the discretion of the Controller' (his contention was also re?ected *y the IPE' ection 4%*& shows that patent is not granted to ena*le the inventor to en?oy monopoly for importation which means that after importing invention, the patentee cannot say that it has done what is re)uired on them and rest with that' (he patentee has a duty to ma2e it availa*le to the pu*lic at a price which the pu*lic can reasona*ly a7ord and in the manner that pu*lic need is satis+ed' IPE o*served that Pu*lic interest and a7orda*ility cannot *e separated' (his was re?ected *y IPE and it stated that5 +Therefore, when we loo# at section '( of the Act, haing regard to section '0, as we are directed by that section, it is clear that it is the duty of patentee to show that the patentee by its own supply has satised the reasonable requirement of the public and by its supply, the drug is made aailable at a reasonably aordable price. The appellant cannot ride piggybac# on C)PA>s sale, particularly when the appellant is ghting C)PA before another forum regarding the same inention and the same drug.+
Binally, the appeal for stay was not granted *y the IPE as Eayer had not made out a prima facie case for the grant of stay' s regards pu*lic interest, it was concluded that Cipla’s presence is su*?ect to litigation and Cipla’s supply cannot *e ta2en note of' The royalty granted by Controller was changed from ?@ to D@ by the )PAB.
CAS- .-/O0- )1- 1I,1 COU0) O/ .O*.A2
Eayer +led a writ of certiorari petition under rticle 11< of the Constitution in the Gum*ai Aigh Court against the orders of the IPE dated " Garch 1$!4 and the Controller dated . Garch 1$!4 in Nuly 1$!.' 0easona*le re)uirement of the Pu*lic The Court held that the conclusion arried at by the Controller was correct '
9ith regard to the contention that the infringerKs sales of the patented product should *e ta2e into consideration to chec2 whether the reasona*le re)uirement of the pu*lic is *eing satis+ed or not it was held *y the Court that the supplies *y infringer %Cipla& cannot *e ta2en into account' (his was *ecause Eayer had +led infringement of patent proceeding against the infringer and at any time the Court could in?unct the infringer from ma2ing8selling the patented drug' Goreover, the o*ligation to meet the reasona*le re)uirement of the pu*lic is of the patent holder alone either *y itself or through its licensees' (he Court then went on to analyFe the term ade)uate e3tent mention in ec' .%#& of the ct and found that in the conte3t of medicines the ade)uate e3tent has to *e !$$M i'e' the re)uirement has to *e fully met' Gedicine has to *e made availa*le to every patient and this cannot *e deprived8scari+ed at the altar of rights of patent holder' (hus the reasona*le re)uirement of the pu*lic under ection .%!&%a& of the ct was not satis+ed' 0easona*ly 7orda*le Price Eayer stated that the reasona*le a7orda*le price has to *e e3amined not only from the perspective of the user of the patented drug *ut also from the patent holderKs cost of inventing and developing the patented invention' Burther Eayer stated that the test of reasona*le price has to *e determined 2eeping in mind the class of the pu*lic to whom the patented drug is made availa*le' Eayer had introduced the concept of di7erential pricing under which the a Patients ssistance Programme %PP& was started which would
ena*le poorer patients to o*tain the patented drug at cheaper prices' 9ith regard to this contention of Eayer the Court held that the obligation of the authorities under the Act is with regard to grant, control and reocation of patent and not price determination of the patented inention. )t further went on to mention that the reasonably aordable price has to be determined on the basis of the relatie price being oered by the patent holder 2Bayer3 and the applicant 28atco3 after hearing other interested parties opposing the application. Therefore, in the present case the price at which Bayer is selling the patented drug is at about -s.9,'(,===per month of therapy and 8atco was oering the same at -s.','==per month of therapy. )n such a case the reasonably aordable price has to necessarily be the price oered by 8atco '
9ith regard to the patented drug *eing availa*le under the PP programme, the Court stated that PP price was a conditional price depending upon the patient satisfying certain pre-e3isting criteria and completely at the discretion of the petitioner and the doctor attending the patient' 9or2ing of the Patent in India5 ccording to Eayer it had wor2ed the patented drug in the territory of India *y importing the patented drug for the supply to patients in the country' (he fact that the wor2ing of the patented drug in India can *e done also *y import and not necessarily *y manufacture of goods in India is an undisputed position as it is so held *y the (ri*unal' =n this issue, the Court e3amined the provisions laid down under rticles 4$ and 4! of (0IP as well as ecs' 4, .%#& and "$ of the ct' )t concurred with decision of the )PAB that importation of the patented product can satisfy the condition of being wor#ed in )ndia and that this needed to be decided on case by case basis. The Court stated that it is for the patent holder to show that the patented inention drug is wor#ed in the territory of )ndia by manufacture or otherwise. )f the patent holder is able to satisfy the authorities,
the
reason
why
the
patented
inention
could
not
be
manufactured in )ndia then the patented inention can be considered as haing been wor#ed in the territory in )ndia een by import.
s the patent had *een granted to Eayer in 1$$ and the application for grant of compulsory license was +led in 1$!!, it was suOcient for Eayer to have wor2ed a patent on a commercial scale *ut it had led no evidence that it had tried to wor2 the patent in India on a commercial scale with promptitude' 9ith regard to the terms and conditions of the grant of patent the Court analyFed rticle 4! of the (0IP agreement along with ection "$ of the ct which inter alia provides that while settling the terms and conditions of the compulsory license the Controller has to ensure that the royalty and other remuneration, if any, paid to the patent holder should *e such as would reasona*ly cover the e3penses incurred *y the patent holder in ma2ing and8or developing and8or maintaining patented invention' Bor the a*ove mentioned reasons the Aigh Court saw no reason to interfere with the =rders of the IPE and the Controller and hence, the petition was dismissed' APP-AL .-/O0- )1- SUP0-*- COU0) O/ IN3IA (SP-CIAL L-A4- )O APP-AL (C" NO(S"5 %#&$'#"
Eayer applied for a pecial eave Petition to the upreme Court of India against the ?udgment of the Eom*ay Aigh Court' =n /ecem*er !1, 1$!., the upreme Court refused to entertain Eayer’s appeal to set aside the compulsory license on orafeni* %De3avar&' The &upreme Court>s dismissal of Bayer>s &pecial eae Petition against the Bombay %igh Court>s decision upholding of the Compulsory icense concluded the legal proceedings on the rst eer Compulsory icense issued in )ndia.
It was stated *y the upreme Court that5
E)n the facts of the present case, we are not inclined to interfere. The &pecial eae Petition is dismissed, #eeping all questions of law open.F
)he license is 6ranted till the remainin6 term o! patent5 1ence7 the license is 6ranted till ''5 1oever7 a compulsory license may +e terminated +y the Controller on an application made +y the patentee that the circumstances that 6ave rise to the 6rant no lon6er exist5
ANN-U0- A Sections 8%5 ,eneral principles applica+le to or:in6 o! patented inventions5
Q9ithout pre?udice to the other provisions contained in this ct, in e3ercising the powers conferred *y this Chapter, regard shall *e had to the following
general
considerations,
namely6Q
%a& that patents are granted to encourage inventions and to secure that the inventions are wor2ed in India on a commercial scale and to the fullest e3tent that is reasona*ly practica*le without undue delay6 %*& that they are not granted merely to ena*le patentees to en?oy a monopoly for the importation of the patented article6 %c& that the protection and enforcement of patent rights contri*ute to the promotion of technological innovation and to the transfer and dissemination of technology, to the mutual advantage of producers and users of technological 2nowledge and in a manner conducive to social and economic welfare, and to a *alance of rights and o*ligations6 %d& that patents granted do not impede protection of pu*lic health and nutrition and should act as instrument to promote pu*lic interest specially in sectors
of
vital
importance
for
socio-economic
and
technological
development of India6 %e& that patents granted do not in any way prohi*it Central @overnment in ta2ing measures to protect pu*lic health6 %f& that the patent right is not a*used *y the patentee or person deriving title or interest on patent from the patentee, and the patentee or a person deriving title or interest on patent from the patentee does not resort to practices which unreasona*ly restrain trade or adversely a7ect the international transfer of technology6 and
%g& that patents are granted to ma2e the *ene+t of the patented invention availa*le at reasona*ly a7orda*le prices to the pu*lic' 8#5 Compulsory licenses'Q%!& t any time after the e3piration of three
years from the date of the grant of a patent, any person interested may ma2e an application to the Controller for grant of compulsory license on patent on any of the following grounds, namely5Q %a& that the reasona*le re)uirements of the pu*lic with respect to the patented invention have not *een satis+ed, or %*& that the patented invention is not availa*le to the pu*lic at a reasona*ly a7orda*le price, or %c& that the patented invention is not wor2ed in the territory of India' %1& n application under this section may *e made *y any person notwithstanding that he is already the holder of a license under the patent and no person shall *e estopped from alleging that the reasona*le re)uirements of the pu*lic with respect to the patented invention are not satis+ed or that the patented invention is not wor2ed in the territory of India or that the patented invention is not availa*le to the pu*lic at a reasona*ly a7orda*le price *y reason of any admission made *y him, whether in such a licence or otherwise or *y reason of his having accepted such a license' %4& >very application under su*-section %!& shall contain a statement setting out the nature of the applicantKs interest together with such particulars as may *e prescri*ed and the facts upon which the application is *ased' %.& (he Controller, if satis+ed that the reasona*le re)uirements of the pu*lic with respect to the patented invention have not *een satis+ed or that the patented invention is not wor2ed in the territory of India or that the patented invention is not availa*le to the pu*lic at a reasona*ly a7orda*le price, may grant a license upon such terms as he may deem +t'
%;& 9here the Controller directs the patentee to grant a license he may, as incidental thereto, e3ercise the powers set out in section ' %<& In considering the application +eld under this section, the Controller shall ta2e into account,Q %i& the nature of the invention, the time which has elapsed since the sealing of the patent and the measures already ta2en *y the patentee or any licensee to ma2e full use of the invention6 %ii& the a*ility of the applicant to wor2 the invention to the pu*lic advantage6 %iii& the capacity of the applicant to underta2e the ris2 in providing capital and wor2ing the invention, if the application were granted6 %iv& as to whether the applicant has made e7orts to o*tain a licence from the patentee on reasona*le terms and conditions and such e7orts have not *een successful within a reasona*le period as the Controller may deem +t5 Provided that this clause shall not *e applica*le in case of national emergency or other circumstances of e3treme urgency or in case of pu*lic non-commercial use or on esta*lishment of a ground of anticompetitive practices adopted *y the patentee, *ut shall not *e re)uired to ta2e into account matters su*se)uent to the ma2ing of the application' >3planation'QBor the purposes of clause %iv&, reasona*le period shall *e construed as a period not ordinarily e3ceeding a period of si3 months' %#& Bor the purposes of this Chapter, the reasona*le re)uirements of the pu*lic shall *e deemed not to have *een satis+edQ %a& if, *y reason of the refusal of the patentee to grant a licence or licences on reasona*le terms,Q %i& an e3isting trade or industry or the development thereof or the esta*lishment of any new trade or industry in India or the trade or
industry of any person or class of persons trading or manufacturing in India is pre?udiced6 or %ii& the demand for the patented article has not *een met to an ade)uate e3tent or on reasona*le terms6 or %iii& a mar2et for e3port of the patented article manufactured in India is not *eing supplied or developed6 or %iv& the esta*lishment or development of commercial activities in India is pre?udiced6 or %*& if, *y reason of conditions imposed *y the patentee upon the grant of licences under the patent or upon the purchase, hire or use of the patented article or process, the manufacture, use or sale of materials not protected *y the patent, or the esta*lishment or development of any trade or industry in India, is pre?udiced6 or %c& if the patentee imposes a condition upon the grant of licences under the patent to provide e3clusive grant *ac2, prevention to challenges to the validity of patent or coercive pac2age licensing6 or %d& if the patented invention is not *eing wor2ed in the territory of India on a commercial scale to an ade)uate e3tent or is not *eing so wor2ed to the fullest e3tent that is reasona*ly practica*le6 or %e& if the wor2ing of the patented invention in the territory of India on a commercial scale is *eing prevented or hindered *y the importation from a*road of the patented article *yQ %i& the patentee or persons claiming under him or %ii& persons directly or indirectly purchasing from him6 or %iii& other persons against whom the patentee is not ta2ing or has not ta2en proceedings for infringement'
8&5 0evocation o! patents +y the Controller !or non;or:in65Q%!&
9here, in respect of a patent, a compulsory licence has *een granted, the Central @overnment or any person interested may, after the e3piration of two years from the date of the order granting the +rst compulsory licence, apply to the Controller for an order revo2ing the patent on the ground that the patented invention has not *een wor2ed in the territory of India or that reasona*le re)uirements of the pu*lic with respect to the patented invention has not *een satis+ed or that the patented invention is not availa*le to the pu*lic at a reasona*ly a7orda*le price' %1& >very application under su*-section %!& shall contain such particulars as may *e prescri*ed, the facts upon which the application is *ased, and, in the case of an application other than *y the Central @overnment, shall also set out the nature of the applicantKs interest' %4& (he Controller, if satis+ed that the reasona*le re)uirements of the pu*lic with respect to the patented invention have not *een satis+ed or that patented invention has not *een wor2ed in the territory of India or that the patented invention is not availa*le to the pu*lic at a reasona*ly a7orda*le price, may ma2e an order revo2ing the patent' %.& >very application under su*-section %!& shall ordinarily *e decided within one year of its *eing presented to the Controller' 8<5 Poer o! Controller to ad=ourn applications !or compulsory licences7 etc57 in certain cases 'Q%!& 9here an application under section
. or section ;, as the case may *e, is made on the grounds that the patented invention has not *een wor2ed in the territory of India or on the ground mentioned in clause %d& of su*-section %#& of section . and the Controller is satis+ed that the time which has elapsed since the sealing of the patent has for any reason *een insuOcient to ena*le the invention to *e wor2ed on a commercial scale to an ade)uate e3tent or to ena*le the invention to *e so wor2ed to the fullest e3tent that is reasona*ly practica*le,
he may, *y order, ad?ourn the further hearing of the application for such period not e3ceeding twelve months in the aggregate as appears to him to *e suOcient for the invention to *e so wor2ed5 Provided that in any case where the patentee esta*lishes that the reason why a patented invention could not *e wor2ed as aforesaid *efore the date of the application was due to any tate or Central ct or any rule or regulation made thereunder or any order of the @overnment imposed otherwise than *y way of a condition for the wor2ing of the invention in the territory of India or for the disposal of the patented articles or of the articles made *y the process or *y the use of the patented plant, machinery, or apparatus, then, the period of ad?ournment ordered under this su*-section shall *e rec2oned from the date on which the period during which the wor2ing of the invention was prevented *y such ct, rule or regulation or order of @overnment as computed from the date of the application, e3pires' %1& Do ad?ournment under su*-section %!& shall *e ordered unless the Controller is satis+ed that the patentee has ta2en with promptitude ade)uate or reasona*le steps to start the wor2ing of the invention in the territory of India on a commercial scale and to an ade)uate e3tent' 8>5 Procedure !or dealin6 ith applications under sections 8# and 8&'Q %!& 9here the Controller is satis+ed, upon consideration of an
application under section ., =r section ;, that a prima facie case has *een made out for the ma2ing of an order, he shall direct the applicant to serve copies of the application upon the patentee and any other person appearing from the register to *e interested in the patent in respect of which the application is made, and shall pu*lish the application in the oOcial ?ournal' %1& (he patentee or any other person desiring to oppose the application may, within such time as may *e prescri*ed or within such further time as the Controller may on application %made either *efore or after the e3piration of the prescri*ed time& allow, give to the Controller notice of opposition'
%4& ny such notice of opposition shall contain a statement setting out the grounds on which the application is opposed' %.& 9here any such notice of opposition is duly given, the Controller shall notify the applicant, and shall give to the applicant and the opponent an opportunity to *e heard *efore deciding the case, 885 Poers o! Controller in 6rantin6 compulsory licences 'Q%!& 9here
the Controller is satis+ed on an application made under section . that the manufacture, use or sale of materials not protected *y the patent is pre?udiced *y reason of conditions imposed *y the patentee upon the grant of licences under the patent, or upon the purchase, hire or use of the patented article or process, he may, su*?ect to the provisions of that section, order the grant of licences under the patent to such customers of the applicant as he thin2s +t as well as to the applicant' %1& 9here an application under section . is made *y a person *eing the holder of a licence under the patent, the Controller may, if he ma2es an order for the grant of a licence to the applicant, order the e3isting licence to *e cancelled, or may, if he thin2s +t, instead of ma2ing an order for the grant of a licence to the applicant, order the e3isting licence to *e amended' %4& 9here two or more patents are held *y the same patentee and an applicant
for
a compulsory licence
esta*lishes
that the
reasona*le
re)uirements of the pu*lic have not *een satis+ed with respect to some only of the said patents, then, if the Controller is satis+ed that the applicant cannot eOciently or satisfactorily wor2 the licence granted to him under those patents without infringing the other patents held *y the patentee and if those patents involve important technical advancement of considera*le economic signi+cance in relation to the other patents, he may, *y order, direct the grant of a licence in respect of the other patents also to ena*le the licensee to wor2 the patent or patents in regard to which a licence is granted under section .'
%.& 9here the terms and conditions of a licence have *een settled *y the Controller, the licensee may, at any time after he has wor2ed the invention on a commercial scale for a period of not less than twelve months, ma2e an application to the Controller for the revision of the terms and conditions on the ground that the terms and conditions settled have proved to *e more onerous than originally e3pected and that in conse)uence thereof the licensee is una*le to wor2 the invention e3cept at a loss5 Provided that no such application shall *e entertained a second time' 895 ,eneral purposes !or 6rantin6 compulsory licences 'Q(he powers
of the Controller upon an application made under section . shall *e e3ercised with a view to securing the following general purposes, that is to say,Q %a& that patented inventions are wor2ed on a commercial scale in the territory of India without undue delay and to the fullest e3tent that is reasona*ly practica*le6 %*& that the interests of any person for the time *eing wor2ing or developing an invention in the territory of India under the protection of a patent are not unfairly pre?udiced' 95 )erms and conditions o! compulsory licences 'Q%!& In settling the
terms and conditions of a licence under section ., the Controller shall endeavour to secureQ %i& that the royalty and other remuneration, if any, reserved to the patentee or other person *ene+cially entitled to the patent, is reasona*le, having regard to the nature of the invention, the e3penditure incurred *y the patentee in ma2ing the invention or in developing it and o*taining a patent and 2eeping it in force and other relevant factors6
%ii& that the patented invention is wor2ed to the fullest e3tent *y the person to whom the licence is granted and with reasona*le pro+t to him6 %iii& that the patented articles are made availa*le to the pu*lic at reasona*ly a7orda*le prices6 %iv& that the licence granted is a non-e3clusive licence6 %v& that the right of the licensee is non-assigna*le6 %vi& that the licence is for the *alance term of the patent unless a shorter term is consistent with pu*lic interest6 %vii& that the licence is granted with a predominant purpose of supply in the Indian mar2et and that the licensee may also e3port the patented product if need *e in accordance with the provisions of su*-clause %iii& of clause %a& of su*-section %#& of section .6 %viii& that in the case of semi-conductor technology, the licence granted is to wor2 the invention for pu*lic non-commercial use6 %i3& that in case the license is granted to remedy a practice determined after ?udicial or administrative process to *e anti-competitive, the licensee shall *e permitted to e3port the patented product, if need *e' %1& Do license granted *y the Controller shall authoriFe the licensee to import the patented article or an article or su*stance made *y a patented process from a*road where such importation would, *ut for such authoriFation, constitute an infringement of the rights of the patentee' %4& Dotwithstanding anything contained in su*-section %1&, the Central @overnment may, if in its opinion it is necessary so to do, in the pu*lic interest, direct the Controller at any time to authorise any licensee in respect of a patent to import the patented article or an article or su*stance made *y a patented process from a*road %su*?ect to such conditions as it considers
necessary to impose relating among other matters to the royalty and other remuneration, if any, paya*le to the patentee, the )uantum of import, the sale price of the imported article and the period of importation&, and thereupon the Controller shall give e7ect to the directions' 95
Licensin6
o!
related
patents'Q%!&
Dotwithstanding
anything
contained in the other provisions of this Chapter, at any time after the sealing of a patent, any person who has the right to wor2 any other patented invention either as patentee or as licensee thereof, e3clusive or otherwise, may apply to the Controller for the grant of a license of the +rst mentioned patent on the ground that he is prevented or hindered without such license from wor2ing the other invention eOciently or to the *est advantage possi*le' %1& Do order under su*-section %!& shall *e made unless the Controller is satis+edQ %i& that the applicant is a*le and willing to grant, or procure the grant to the patentee and his licensees if they so desire, of a licence in respect of the other invention on reasona*le terms6 and %ii& that the other invention has made a su*stantial contri*ution to the esta*lishment or development of commercial or industrial activities in the territory of India' %4& 9hen the Controller is satis+ed that the conditions mentioned in su*section %!& have *een esta*lished *y the applicant, he may ma2e an order on such terms as he thin2s +t granting a licence under the +rst mentioned patent and a similar order under the other patent if so re)uested *y the proprietor of the +rst mentioned patent or his licensee5 Provided that the licence granted *y the Controller shall *e nonassigna*le e3cept with the assignment of the respective patents' %.& (he
provisions of sections #, , " and "$ shall apply to licences granted under this section as they apply to licences granted under section .' 9'5 Special provision !or compulsory licences on noti?cations +y Central ,overnment5Q%!& If the Central @overnment is satis+ed, in respect
of any patent in force in circumstances of national emergency or in ircumstances of e3treme urgency or in case of pu*lic noncommercial use, that it is necessary that compulsory licenses should *e granted at any time after the sealing thereof to wor2 the invention, it may ma2e a declaration to that e7ect, *y noti+cation in the =Ocial @aFette, and thereupon the following provisions shall have e7ect, that is to sayQ %i& the Controller shall on application made at any time after the noti+cation *y any person interested, grant to the applicant a licence under the patent on such terms and conditions as he thin2s +t6 %ii& in settling the terms and conditions of a licence granted under this section, the Controller shall endeavour
to secure
that the
articles
manufactured under the patent shall *e availa*le to the pu*lic at the lowest prices consistent with the patentees deriving a reasona*le advantage from their patent rights' %1& (he provisions of sections 4, #, , " and "$ shall apply in relation to the grant of licences under this section as they apply in relation to the grant of licences under section .' %4& Dotwithstanding anything contained in su*-section %1&, where the Controller is satis+ed on consideration of the application referred to in clause %i& of su*-section %!& that it is necessary inQ %i& a circumstance of national emergency6 or %ii& a circumstance of e3treme urgency6 or %iii& a case of pu*lic non-commercial use,
which may arise or is re)uired, as the case may *e, including pu*lic health crises, relating to c)uired Immuno /e+ciency yndrome, Auman Immuno /e+ciency Virus, tu*erculosis, malaria or other epidemics, he shall not apply any procedure speci+ed in section # in relation to that application for grant of licence under this section5 Provided that the Controller shall, as soon as may *e practica*le, inform the patentee of the patent relating to the application for such non-application of section #' 9'A5 Compulsory licence !or export o! patented pharmaceutical products in certain exceptional
circumstances 'Q%!& Compulsory
licence shall *e availa*le for manufacture and e3port of patented pharmaceutical
products
to
any
country
having
insuOcient
or
no
manufacturing capacity in the pharmaceutical sector for the concerned product to address pu*lic health pro*lems, provided compulsory licence has *een granted *y such country or such country has, *y noti+cation or otherwise, allowed importation of the patented pharmaceutical products from India' %1& (he Controller shall, on receipt of an application in the prescri*ed manner, grant a compulsory licence solely for manufacture and e3port of the concerned pharmaceutical product to such country under such terms and conditions as may *e speci+ed and pu*lished *y him' %4& (he provisions of su*-sections %!& and %1& shall *e without pre?udice to the e3tent to which pharmaceutical products produced under a compulsory license can *e e3ported under any other provision of this ct' >3planation'QBor the purposes of this section, Kpharmaceutical productsK means any patented product, or product manufactured through a patented process, of the pharmaceutical sector needed to address pu*lic health
pro*lems
and shall *e inclusive of ingredients
manufacture and diagnostic 2its re)uired for their use'R
necessary for
their
)1- PA)-N)S 0UL-S7 '% 9<5 Application !or compulsory licence etc5 Qn application to the
Controller for an order under section ., section ;, section "! or section "1 or section "1 shall *e in Borm !#, or Borm !", as the case may *e' >3cept in the case of an application made *y the Central @overnment, the application shall set out the nature of the applicantKs interest and terms and conditions of the licence the applicant is willing to accept' 9>5 @hen
a
prima
!acie
case
is
not made
out'Q%!& If, upon
consideration of the evidence, the Controller is satis+ed that a prima facie case has not *een made out for the ma2ing of an order under any of the sections referred to in rule "<, he shall notify the applicant accordingly, and unless the applicant re)uests to *e heard in the matter, within one month from the date of such noti+cation, the Controller shall refuse the application' %1& If the applicant re)uests for a hearing within the time allowed under su*rule %!&, the Controller shall, after giving the applicant an opportunity of *eing heard, determine whether the application may *e proceeded with or whether it shall *e refused' 985 Notice o! opposition under section 8>('"5(!& notice of
opposition under su*-section %1& of section # shall *e given in Borm !. and shall *e sent to the Controller within two months from the date of the pu*lication of the application under su*-section %!& of the said section' %1& (he notice of opposition referred to in su*-rule %!& shall include the terms and conditions of the licence, if any, the opponent is prepared to grant to the applicant and shall *e accompanied *y evidence in support of the opposition' %4& (he opponent shall serve a copy of his notice of opposition and evidence on the applicant and notify the Controller when such service has *een e7ected'
%.& Do further statement or evidence shall *e delivered *y either party e3cept with the leave of or on re)uisition *y the Controller' %;& (he Controller shall forthwith +3 a date and time for the hearing of the case and shall give the parties not less than ten daysK notice of such hearing' %<& (he procedure speci+ed in su*-rules %1& to %;& of rule <1, shall, so far as may *e, apply to the procedure for hearing under this rule as they apply to the hearing in opposition proceedings' 995 *anner o! pu+lication o! the revocation order'Q(he Controller
shall pu*lish the order made *y him under su*-section %4& of section ; revo2ing a patent' 5 Application under section 88(#"5Q%!& n application under su*-
section %.& of section for the revision of the terms and conditions of a license which have *een settled *y the Controller shall *e in Borm 1$ and shall state the facts relied upon *y the applicant and the relief he see2s and shall *e accompanied *y evidence in support of the application' %1& If the Controller is satis+ed that a prima facie case has not *een made out for the revision of the terms and conditions of the license, he may notify the applicant accordingly and unless within a month the applicant re)uests to *e heard in the matter, the Controller may refuse the application' %4& (he Controller, after giving the applicant an opportunity of *eing heard, shall determine whether the application shall *e proceeded with or whether the application shall *e refused' 5 Procedure to +e !olloed in case o! applications under section 88(#"5( !& If the Controller allows the application to *e proceeded with, he
shall direct the applicant to serve copies of the application and of the evidence in support thereof upon the patentee or any other person
appearing in the register to *e interested in the patent or upon any other person on whom, in his opinion such copies should *e so served' %1& (he applicant shall inform the Controller the date on which the service of copies of application and of the evidence on the patentee and other persons referred to in su*-rule %!& has *een e7ected' %4& (he patentee or any other person on whom copies of the application and of the evidence have *een served, may give to the Controller notice of opposition in Borm !. within one month from the date of such service' uch notice shall contain the grounds relied upon *y the opponent and shall *e accompanied *y evidence in support of the opposition' %.& (he opponent shall serve copies of the notice of opposition and his evidence on the applicant and inform the Controller the date on which such service has *een e7ected' %;& Do further evidence or statement shall *e +led *y either party e3cept with special leave of or on re)uisition *y the Controller' %<& =n completion of the a*ove proceedings, the Controller shall forthwith +3 a date and the time for the hearing of the case and shall give the parties not less than ten daysK notice of such hearing' %#& (he procedure speci+ed in su*-rules %1& to %;& of rule <1 shall, so far as may *e, apply to the procedure for hearing under this rule as they apply to the hearing in opposition proceedings' %& If the Controller decides to revise the terms and conditions of license he shall forthwith amend the licence granted to the applicant in such manner, as he may deem necessary' '5 Application !or termination o! compulsory license under section 9#'Q%!& n application for termination of compulsory licence under section
".%!& shall *e made in Borm 1! *y the patentee or any other person deriving
