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RIGHTS OF PATENTEE AND COMPULSORY LICENCE
Introduction
A Patent holder enjoys enjoys a set set of exclusive rights rights given as an incentive for the investment in innovative activities and for the dissemination of knowledge to public .However these rights are not perpetual and can be revoked in exceptional circumstances o balance the interest of the patent holders with those of the others; there are various exceptions and limitations to these rights .Such exceptions are experimental or research use ; use on foreign vessels ; obtaining regulatory approval from authorities ; exhaustion of patent rights and parallel imports; compulsory licencing and use or acquisition of inventions by governments .even though there are exceptions and limitations ,yet the term to hold a patent remain unaltered . Thus a Patent is a set of exclusive rights granted by a state to an inventor or his assignee for a fixed period of time in exchange for the disclosure of the invention. It refers to a grant of some privilege, property, or authority made by a government or the sovereign of the country to one or more individuals. The instrument by which it made is known as Patent. An invention is the creation of intellect applied to capital and labour to produce
something new and useful. useful. Such Such
creation becomes the exclusive property of the inventor on the grant of patent. RIGHTS OF PATENTEE
A patent is a statutory grant conferring certain monopoly rights on the grantee for a defined period, subject to certain conditions. In some respect it may be considered as a species of property. A patent
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grant gives the patentee the exclusive right to make or use the patented article or use the patented process. As a consequence flowing from this he can prevent all others from making or using the patented article or using the patented process. A patent monopoly not only entitles the holder to exploit the invention without competition during the period of patent protection; it also enables him to enter the market, on the expiry of the monopoly in a strong strong position. A patentee has also the
power to assign the
patent, grant licences under, or otherwise deal with it for any consideration. These rights created by statute are circumscribed by various conditions and limitations. The right of a patentee is considered as a chose in action. In Edwards v. Picard , Vaughan Williams, L.J. observed: “Now what is
the right of the patentee? It is a chose in action created by the exercise of Royal prerogative, and entirely distinct from the right of property in a chattel created under it.” Again, Buckley, L.J. observed: “The legal
qualities of a patent are, not that it confers upon the patentee a right to manufacture, for that he could do without a patent, but that it gives him monopoly in the manufacture. It creates in him a right of action to prevent anyone else else manufacturing. manufacturing. It creates in him a right to bring an action for infringement with resultant remedy by way of injunction, or damages or both. This is a legal right. The right of a patentee to the exclusive use of the patented invention for the period of its protection under the Act is a right to property. There is no exclusive right similar to that of a patent in a secret formula or process not patented under the Act. When a person has discovered a valuable invention and has not patented it, anyone who
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had discovered the ingredients may, in the absence of any breach of trust or fraud, sell those ingredients. Any person who has become acquainted with the process of manufacturing an article which is in general secret is entitled to manufacture it. A person can be prevented from using a secret process only on the basis of breach of contract, breach of confidence or fraud. Thus in United Indigo Chemical Co Ltd. v. Robinson it was held that an
employer cannot prevent his employee using, after termination of the employment, knowledge knowledge honestly acquired during the course of his h is former employment. Benefits conferred upon the patentee
The patent law recognizes the exclusive right of a patentee to gain commercial advantage out of his invention. This is to encourage inventors to invest their creative facilities, knowing that their inventions would be protected by law and accordingly no one else would be able to copy their inventions for certain period (generally 20 years) during which which the inventor would have exclusive rights. rights. Once a patent is granted, certain monopolistic rights are conferred upon the patentee, as an incentive for disclosing his invention to the public. These monopoly rights, generally for a period of 20 years, are assignable thus enabling the patentee to licence invention thereby
maximizing his profit . Article 28 of the TRIPS Agreement provides these exclusive rights as
follows: 1.
A patent shall confer on its owner the following exclusive rights:
(a)
where the subject matter of a patent is a product, to prevent
third parties not having the owner’s owner’s consent from from the acts of: making,
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using, offering for sale, selling, or importing for these purposes that that product; (b)
where the subject matter of a patent patent is a process, process, to prevent
third parties not having the owner’s consent from the act of using the process, and from the acts of:
using, offering for for sale, selling, or
importing for these purposes at least the product obtained directly by that process. 2. Patent owners shall also have the right to assign, or transfer by succession, the patent and to conclude licensing contracts.’
Section 48 of the Patent Act, 1970 which embodies Article 28 above, provides the follows exclusive rights to the patentees: Right to use and exercise the patent
Section 48 confers on the patentee the exclusive right to make, use, exercise, sell or distribute the patented article or substance in India, or to use or exercise the methods or process if the patent is for a Process. This This right can be exercised exercised either by the patentee himself or by his agents or licensees The patent is granted in the form prescribed under s 46(1), which reiterates the exclusive right of the patentee to use the patent. Where a patent has lapsed due to non-payment of renewal fee, the patentee may have the patent restored on following the procedure laid down under ss. 60 and 61. A patentee has power to assign, grant licences under, or otherwise deal with the patent for any consideration.If he is a coowner of the patent, he can assign any share of the patent or grant licences to others to use the patent only with the consent of the coproprietors or under the directions of the Controller.
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The patentee may amend the complete complete specification of his patent patent on application made to the Controller for the purpose. A patentee has the right to surrender his patent. If the patentee or any other person is not interested in working the patent, it may be advisable to surrender the patent to avoid possible revocation proceedings and consequent liability to pay costs. When a patent is granted to two or more persons, each of the coowners, in the absence of any agreement to the contrary, is entitled to an equal undivided share in the patent. Each of them is entitled, by himself or his agents, to make, use or exercise the patent without accounting to the others. This is of course, subject to any agreement to the contrary. During the period from the date of advertisement of the acceptance of a complete specification and the date of sealing of the patent, the applicant can exercise all the privileges privileges and rights of a patentee except the filing of a suit for infringement. Any person may, for the purpose merely of experiment or research, or for the purpose of imparting instructions to pupils, make or use a patented article or use a patented process. A patent has the same effect as against the Government as it has against any other person. Thus the Government is bound to honour the rights of the patentee granted under the Act. Government may use the patented invention or even acquire it, or prohibit a person from using an invention on certain terms and circumstances. The rights of a patentee can be enforced by a suit for infringement of the patent or an action for recovery of royalties or an
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action for specific performance of contract, depending upon the nature of the right under the patent sought to be enforced. Jeremy Bentham strongly strongly argued that as an invention involved a
great deal of time, money and effort and included a large element of risk, the exclusive use of the invention must be reserved for a period of time so that it could be exploited and thereafter used for the general increase of knowledge and wealth. In Asahi , Kanei Kogyo Lord Oliver expressed the underlying objective of patent law as encouraging improvements and innovation by conferring the benefit of a monopoly for a defined period on the inventor so that he may make known his invention to the public. Another purpose equally stimulating is that companies would be willing to take risk and expend much money and efforts in the developments of scientific and technical research. Patents have a special significance to inventors especially in the pharmaceutical industry. It is estimated that on an average more than $45 billion are spent yearly on R&D. Moreover, average R&D expenditures per company have grown at a rate of close to 300% per year. It is also submitted in spite of huge investments incurred; very few drugs are actually commercially produced. In the course of the R&D process, more than 8,000 compounds are tested on average, of which only one is developed into a potent and safe drug. Patents granted to pharmaceutical products encourage more extensive and comprehensive research in that area. The monopoly rights conferred by the patent system provide the necessary incentive for pharma companies to invest their resources in R&D.
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Benefits conferred upon the society
Through
patents,
monopoly
rights
are
conferred
upon
inventors. Inventors alone have the right to make, sell, licence the patented invention. Many consider this as detrimental to the interests of society as patentees have the discretion of charging their own prices for their products. Further, they might refuse to sell their patented products in certain areas depriving people of the benefits of their inventions. While these misgivings might to true to an extent, it s seen that that society’s interests are protected rather than derided by the patent system. Firstly , all inventions for which patents are granted are accompanied by an enabling disclosure, i.e. all details required to reproduce the invention are provided. As the details of the invention fall into the public domain , competing inventors can use this information as a base and improve upon the same, thus automatically providing for higher quality goods and increasing the choice of the consumers in the market. Secondly , although the grant of the patent confers the exclusive right to make, sell, licence the patented right etc., it is clearly provided that the use of the invention for research or teaching purposes shall not be considered as a violation of the patentees rights. ‘ Members Members may provide limited exceptions to the exclusive rights conferred
by
a
patent,
provided
that
such
exceptions
do
not
unreasonably conflict with a normal exploitation of the patent and do not unreasonably prejudice the legitimate interests of the patent owner, taking account of the legitimate interests of the third parties.’ parties.’
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Limited Exceptions To The Rights Article 30 of the TRIPS Agreement (elaborated below) provides for limited exceptions to to the rights conferred upon a patentee: Section 47 of the Indian Patent Act, 1970 , which embodies this limited exception clause, provides that the grant of a patent is subject
to certain conditions Grant of patents
The grant of a patent confers exclusive rights on the patentee to prevent others from doing certain acts with respect to the patent for 20 years. In the case of a productpatent, the patentee will have exclusive right to prevent third parties from making, using,offering for sale, selling or importing, for those purposes, that product in India. In the case of a process patent, the patentee will have the exclusive right to prevent third parties from using that process and from the act of using, offering for sale, selling or importing for those purposes the product obtained directly by that process in India. If any person does any of the above acts without the consent of the patentee, it would amount to an infringement of the patent. The right to institute infringement action accrues on the patentee only after the grant. When a patent application made before the Patent Office is found to be in order for the grant, and it has neither been refused by the Controller, nor found to be in contravention of any of the provisions of the Patents Act, a patent shall be granted as expeditiously as possible possible
to the the applicant. Upon the grant of the the
patent, the Controller shall publish the fact that the patent has been granted and the application, specification and other documents related thereto shall be open for public inspection. Every patent shall
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be granted in the prescribed form bearing the serial number accorded to the application. As a patent application can be made for one invention only, it follows that a patent shall be granted for one invention only. Section 47 states that the grant of a patent under the Patents Act is subject to certain conditions contained therein, the details of which are as follows: (i) Government Use: Any process or product which is the subject matter of a patent may be imported or made by the government for its own use. (ii) Experiment and Research: Any person may make or use any patented product or a product made by a patented process or use a patented process for the purpose of experiment or research. (iii) Import of Medicine or Drug: In the case of a patent in respect of any medicine or drug, the patent is granted subject to the condition that the government may import such medicine or drug for its own use or for distribution in any dispensary, hospital or other medical institution maintained by or on behalf of the government. Thus it is clear that notwithstanding the fact that patents confer certain exclusive privileges, the grant of patents itself is subrogated to the interests of of society. This is of special significance in the pharma pharma industry, where patents provide the fine balance between the incentives to innovate and safeguarding the interests of society. In the absence
of
sufficient
safeguards
to
patentee’s
rights,
the
pharmaceutical companies would not produce, let alone disclose scientific formulations, which would not only stem scientific progress
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but also deny the few who have access to patented products their right to enjoy them From the above it is clear that it is society’s best interest that genuine innovations should be protected and rewarded without stifling further innovation. The best illustration of how a patent benefits the public by encouraging disclosure in return for a period of exclusivity is the plain-paper copier (the “Xerox machine”). Before the invention of that copier, copies had to be made using expensive and messy systems like photography, heat-sensitive paper, or mimeographs and ditto machines. That changed when a patent attorney came up with an electrostatic copying method. Because the patent attorney was the first to invent the technique, he received a patent giving him the exclusive right to practice the invention for 17 years (under the law at that time). By the time the patent expired, Xerox was an established company, and companies like IBM and Canon joined Xerox in building and marketing plain-paper copiers. Benefits conferred upon the government:
Intellectual property is based on liberal, democratic principles. Any person, exercising mental effort may claim it and no political system dare destroy it. Shri Kamal Nath, the Union Minsiter for Commerce and Industry has observed: ‘ Intellectual Intellectual property is the foundation of a knowledge based economy and is becoming increasingly important not only for creation of wealth, but for providing employment and improved standard of living for the masses.’ masses.’
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Thus, it clear that the benefits of the patent system are not restricted to the inventors and consumers alone. The government too is a considerable stakeholder in patent system, being a key roleplayer in the patent policy. One of the reasons for the tremendous and rapid advance in industrial power in the United States from the 19th century was the liberal patent laws, the number of patens exceeding the million mark in 1911 itself. As of today it is estimated that the US and EU together hold 97% of all patents worldwide, and multinational corporations account for 90% of all product and technology patents. The purpose of an invention is to protect and encourage fair competition in the field of technology so as to transform inventions or creations into real and productive forces as quickly as possible. A country’s market economy is dependant on the successful working of its patent system. Patents in India and rights of patentee
Patents have a rich and varied history in India. As India was colonized by the British, the developments in patent law in England were generally mirrored by corresponding developments in Indian law. Law relating to patentable inventions in Britain and India is substantially the same. The history of the Indian Patent system can be traced to 1859, when Act VI of 1859 on protection of inventions based came to be enacted. The Act conferred certain exclusive privileges to inventors
of
new
manufacturers
for
a
period
of
14
years.
Subsequently, the British rulers enacted the Patents and Designs Protection Act, 1888 which was repealed by the Indian Patent and Designs Act, 1911 with the objective of ‘ saving saving the interests of inventors ’. ’. However, on account of substantial changes in political and
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economic conditions in the country, it was found desirable to enact a ensure that patent comprehensive law on the subject, which would ‘ ensure rights are not worked to the detriment of the consumer or to the prejudice of trade or to the industrial industrial development of the country .’ .’ It was
with this lofty ideal that the Indian Patent Act, 1970 came to be enacted. However, with the rapid advancements in science and technology and the development of a ‘global village’, the need was felt
for greater international cooperation for the protection of the rights of inventors as well as safeguarding the interests of consumers. Consequently, in 1995, nations of the world ratified the Agreement on Trade
Related
Aspects
of
Intellectual
Property
Rights
(TRIPS
Agreement) with the concomitant objective of ‘ taking taking into account the need to promote effective and adequate protection of intellectual property rights ’ and for ensuring that ‘ measures measures and procedures to enforce intellectual property rights do not themselves become barriers to legitimate trade ’. ’. India became a signatory to the TRIPS Agreement in
1995, by virtue of which it was bound to bring its existing intellectual property laws in compliance with the TRIPS Agreement within a period of ten years i.e. by 2005. The first TRIPS compliant amendment to the Patent Act, 1970 came via the Patent (Amendment) Act, 2002. The Amendment made several broad reaching changes to the existing Act, in an endeavour to ‘ make make the law TRIPS compliant, but also to provide therein adequate and necessary safeguards for protection of public interest, national security,
bio-diversity,
traditional
knowledge
etc.’ etc.’
The
second
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Amendment, introduced in 2005, the Patent Amendment Act, 2005, was enacted with nearly similar objectives. Thus, it can be seen that the jurisprudentially, all patent enactments in the country have sought to strike a balance between the competing interests of consumers and those of inventors. The Acts have recognised internationally accepted principles for granting rights to patentees and concurrently have made suitable modifications in the Indian milieu to provide adequate protection to society at large. Technological stagnation has been sought to be avoided and at the same time measures have been introduced to ensure that monopolies conferred by the grant of a patent are not used to the detriment of the society as a whole. COMPULSORY LICENSING
Compulsory License as a mechanism is allowed by the agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) – the international agreement which establishes intellectual property rights, including patent rights. Patent protection can be overcome through the use of Compulsory Licenses, which enables other companies to produce a patented product without the permission of the patent holder. A compulsory license creates an exception to the monopoly created by patent protection and acts as a legal counterweight to combat the adverse effects of patents. TRIPS empowers the State to make use of Compulsory License according to its own discretion. Thus, the State can rightfully resort to the use of Compulsory License in order to meet health requirements of the country’s population.
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Patents--Balance of competing interests for the benefit of all
It is clear that any patent system involves the balancing of competing interests. While companies on the one hand would seek to extend their monopoly rights over patents, thereby maximizing their profits from the same, society would require that these monopolies be destroyed, leading to more competitors entering the market thereby reducing prices of the patented product. In reality however, such a conflict of interest should not arise. As the application for a patent is accompanied by the complete enabling disclosure of the invention, competitors often use this information to produce improved products and patent them. Their improved products being also accompanied by enabling
disclosure,
provides
the
necessary
base
for
further
improvements. Thus consumers benefit as the patent system automatically leads to an increased choice in the market and companies benefit as they can focus their energies on providing new and improved products rather than diverting their resources to ascertain the nature of existing inventions. Grounds of granting Compulsory License
The Patent Act provides for the grounds on and procedures by which, a compulsory license can be granted. The grounds on which a compulsory license can be granted are: I.Reasonable requirements of the public with respect to the patented invention have not been satisfied; or, II.The patented invention is not available to the public at a reasonably affordable price; or,
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III.The patented invention is not worked (i.e. not used or performed) in the territory of India. The following factors are also to be taken into account : a
circumstance of national emergency; a circumstance of extreme urgency; or a case of public non-commercial use, which may arise or is required, as the case may be, including public health crises such as those relating to Acquired Immuno Deficiency Syndrome (AIDS), Human Immunodeficiency Virus (HIV), Tuberculosis, Malaria, or other epidemics. However, the Patents Act does not provide the definitions of the following expressions: “circumstance of national emergency”; and “a
circumstance of extreme urgency.” Therefore, the courts would be required to interpret these expressions on a case-by-case basis. As per sec 84 Any person interested in working the patented
invention may apply to the Controller of Patents for a compulsory license at any time after three years have elapsed from the date of grant of the patent. While examining the application, the Controller also considers such aspects as the nature of the invention; the time that has elapsed since the grant of the patent and the measures already taken by the patentee or any licensee to make full use of the invention; the ability of the applicant to work the invention for public advantage; and the capacity of the applicant to undertake the risk in providing capital and working the invention, if the application were granted. The Act itself balances the ‘competing interests’ of society. It
envisages that in certain exigent situations, there might be a conflict between the interests of society and the rights of the patentee.
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Recognizing the most basic principle of salus populii est suprema compulsory licenses ’. ’. lex , the Act provides, inter alia, for the grant of ‘ compulsory Section 92 of the Act reads: “If the Central Government is satisfied, in respect of any patent in circumstances of national emergency or in circumstances of or in case of public non-commercial use , then it is extreme urgency or necessary that compulsory licenses should be granted at any time after the sealing thereof to work the invention, it may make a declaration to that effect, by notification in the official Gazette…”
Thus, through the compulsory licensing regime, the rights of the patentee are waived and the Central Government may license the patent as it sees fit. However, even in this exigency, the Act reserves the right of the patentee to secure adequate compensation, thus ensuing that the rights of the patentee are protected as well. S.89 (b) of the Act which considers ‘ General General principles applicable for the grant of compulsory licences ’ states: “…the “…the interests of any person for the time being working or developing an invention in the territory of India under the protection of a patent are not unfairly prejudiced ”
Natco v Bayer and Compulsory License cases in India
In March 2012, the Controller General of Patents created history with a landmark judgment granting the first ever Compulsory License to an Indian generic company. It permitted Natco Pharma to manufacture and sell a generic version of Bayer Corporation’s pa tent
protected
anti-cancer
drug
‘Sorafenib
Tosyalte’
(marketed
as
NEXAVAR). The drug was useful in treating advanced liver and kidney
cancer. Natco had filed an application for Compulsory License under
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Section 84(1), Patents Act, 1970. It had earlier approached Bayer with a request for a voluntary license proposing to sell the drug at a greatly reduced price, which Bayer did not allow. The Controller found that all the three conditions71 required for the grant of compulsory license were fulfilled and that this case merited the award of compulsory license to Natco. On appeal, the IPAB held that Bayer did not meet the reasonable requirement of the public (as only 2% patients are eligible for the same) and that the price of the drug (Rs. 2.8 lakhs per month) was not reasonably affordable in India when the purchasing power of the public is taken into consideration. This was the first case in which a request under Section 84 of the Indian Patent Act, 1970 had been made, seeking the grant of compulsory license. Since the Bayer-Natco decision, there have been two more instances where Compulsory Licenses have been applied for. In the first instance, the Health Ministry applied to the Department of Industrial Policy and Promotion for the grant of Compulsory License for cancer drug Trastuzumab, which was marketed in India as Herceptin by Genentech and Herclon by Roche. The request was made under Section 92 of the Patents Act, 1970, which allows the Government to file for a license in case of national emergency. This was on the ground that the drug was not affordable. However, the DIPP rejected this request as it found that the requirements for grant of compulsory license under Section 92 of the Indian Patent Act, 1970 was not satisfied A request was also made by Indian generic drug manufacturer, BDR Pharmaceutical with respect to cancer drug Dacatinib, marketed by Bristol Myers Squibb as Sprycel under Section 84 of the Indian
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Patents Act for grant of compulsory license. An order was passed by the Controller of Patents on 29th October, 2013 wherein the compulsory licensing application was rejected on the basis that a prima facie case had not been made out since BDR had not followed the procedural requirements as prescribed under the law before applying for the compulsory license application. In view of this the Controller of Patents did not go into the merits and rejected the compulsory license application. Rights of the Applicant Post Publication
From the date of publication of the application until the date of the grant of a patent, the applicant has the like privileges and rights as if a patent for the invention has been granted on the date of publication of the application. However, applicant is not entitled to institute any proceedings for infringement until the patent has been granted. S. 90(ii) of the Act states : “…the “…the Controller shall endeavor to secure--
(ii)
“that the royalty and other remuneration if any reserved to the
patentee or other person beneficially entitled to the patent p atent is reasonable having regard to the nature of the invention, the expenditure incurred by the patentee in making the invention or in developing it and obtaining a patent and keeping it in in force and other relevant relevant factors”
Further, S. 92 of the Act which deals with granting compulsory licenses in special circumstances states: “in settling terms and conditions of license granted under this section the Controller shall endeavor to secure that the articles manufactured under the patent shall be … consi stent stent with the patentees deriving a reasonable advantage from their patent rights ”
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Similar provisions are seen when the government acquires the patent. It is clear from the above that the Act not only recognizes the right of the patentee in securing a “reasonable “reasonable advantage ” from the patented
product but also considers remuneration to the patentee in case compulsory licenses are granted. Generally it is seen that it has been a practice of all nations that whenever a compulsory license have been granted, some amount of compensation has always been paid to the patentee. The Supreme Court of Canada, for instance has held that the duty of of the Commissioner to fix reasonable compensation for the Government use of a patent vests in the patentee a legal right and a petition lies in the Court to enforce this right. Thus it can be seen that there is an equanimity maintained through the patent system. Whenever the monopoly rights conferred upon the patentee are usurped, care is taken to ensure that the rights of the patentee are not ‘ unfairly unfairly prejudiced ’ in addition compensation is paid to the patentee for such ‘ infringement’ infringement’ of of his rights.
The Act also contains general principles applicable to the working of all patented inventions. It is provided that in exercising powers concerning grant of compulsory licences, regard should inter alia be be had to encourage innovations and to secure that inventions are
worked in India on a commercial scale, and to the fullest extent reasonably practicable without undue delay; and not to encourage a patentee to merely import the patented article, but to see that patent rights contribute to technological innovation, and to transfer and to disseminate technology for the mutual advantage of producers and users of technological knowledge in a manner conducive to social and
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economic welfare and to ensure that the benefit of the patented invention is available at a reasonably affordable prices to the public and for grant of compulsory licences in respect of patents for the reasonable requirements of the public. Obligation of a patentee
The possession of a patent confers on the patentee not merely certain valuable monopoly rights and
privileges, but also certain
obligations and duties. Patents are granted not only to encourage inventions but also to secure that the inventions are worked in India on a commercial scale and to the fullest extent that is reasonably practicable without undue delay. It is also essential that the monopoly created by the patent should not unfairly prejudice the interest of the public. The Act therefore contains provisions for revocation of patents in certain circumstances, and granting of compulsory licences if the patent is not used or the monopoly abused. It is an implied responsibility of the patentee to work the patent in India in such a manner that the reasonable requirements of the public with respect to the patented invention are satisfied and that the patented invention is made available to the public at a reasonable price. Failure to discharge this obligation may amount to abuse of the monopoly granted. Further, provision is also made to restrain the patentee from making unjustifiable threats of an action for infringement of the patent.
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Conclusion
The ultimate goal of any intellectual property system is the advancement of science and technology as a means of securing overall social and economic development. By conferring exclusive rights on inventors, the true goals of any intellectual property system are actually the advancement of science and technology. It is expected that if additional rights are conferred upon inventors, it would induce further inventions, enabling giant strides in the development of technology, ultimately benefiting society. Thus it can be seen from the above that the intellectual property law by protecting the rights of an inventor in his invention actually ensures the progress and growth of science and technology as a means of securing economic and social development.
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