This article is written by Upasna Upadhyay, Dr.Rizvi College of Law, a final- year BALLB (Hons.) student during an internship at LeDroit India.
KEYWORDS
Compulsory Licensing, Patents, Intellectual Property Rights, Patents act, general welfare, TRIPS Agreement.
ABSTRACT
One important tool for striking a compromise between the rights of patent holders and the general welfare is compulsory licensing, especially when it comes to guaranteeing access to necessary products and intellectual property. The Patents Act, 1970, which governs this process in India, permits compulsory licensing under certain circumstances, such as the inability to obtain a patented product at a reasonable cost, the failure to meet public needs, or the patent’s non-operation within the nation.
The idea of mandatory licensing is not the same everywhere. Under the Bayh-Dole Act, the US takes a restricted stance, while the EU uses it in times of public health emergency, such as when it comes to COVID-19 treatments. With a focus on inexpensive access to necessary medications, Brazil and South Africa have aggressively used compulsory licensing to fight diseases like HIV/AIDS. China incorporates this method within its larger plan to use intellectual property to further its own goals. These procedures are in line with the TRIPS Agreement, which stipulates minimal requirements for intellectual property protection while permitting flexibility to meet public health requirements.
This essay emphasizes how crucial it is to use compulsory licensing sparingly in order to advance public health, especially in a nation with such a diversified socioeconomic landscape as India. It is clear from contrasting India’s system with international norms that mandatory licensing is an effective means of guaranteeing fair access to technology and tackling new global issues like pandemics and climate change.
INTRODUCTION
A legal technique by which a government allows third parties to manufacture, utilize, or market a patented innovation without the patent holder’s consent is known as compulsory licensing. Despite appearing to be at odds with the fundamental ideas of intellectual property rights, this clause is essential for guaranteeing that, in certain situations, the public interest supersedes monopoly rights.
Like a country can import a generic version of a patented drug by issuing a compulsory licence to a company or agency to import the drug, and the government has the freedom to determine the grounds upon which such licences are given. The imported drug can be from a country in which the drug is not patented, or in which the drug is patented. The applicant has first to negotiate to obtain a voluntary licence from the patent holder and if that fails, then a compulsory licence can be granted. Adequate compensation has to be paid to the patent holder. Guaranteeing that, in certain situations, the public interest supersedes monopoly rights .
The decision requires the exporting country to grant a compulsory licence. It does not waive that prior to issuance of a compulsory licence, a request for a voluntary licence be made to the patent owner.If the request for the voluntary licence is unsuccessful, the interested supplier would have to apply for a compulsory licence under the applicable national rules. The competent national authority would have to decide on the application and determine the remuneration to be paid. The patent owner may appeal the government’s decision to grant a compulsory licence .
COMPULSORY LICENCING UNDER INDIAN LAW
In India, compulsory licencing is based on the Indian Patents Act of 1970. Compulsory licencing is permitted under Section 84 of the Act for three primary reasons:
- Reasonable public requirements are not being met: This includes circumstances in which the public cannot pay or obtain sufficient quantities of the patented invention.
- Lack of availability at a fair price: When a patented product is too costly to purchase, access is impeded.
- Patent non-operation in India: When the patent holder fails to produce the patented product in India without a valid reason.
A compulsory licence is an authorization granted by a government allowing third
parties to produce a patented product or to utilize a patented process without the
consent of the patent holder, and which use will not amount to an infringement of the
patent. The grant of a compulsory licence constitutes a proactive governmental
intervention when market forces result in a disequilibrium between the objectives
of rewarding innovation and ensuring social and economic welfare . They ‘ensure
an efficient operation of innovation markets by avoiding the risk that patents themselves become barriers to invention and innovation policy tools, compulsory licences help to ensure that patent protection remains properly balanced with other socio-economic interests.’
BAYER V. NATCO CASE
The first time a compulsory license was given in India was in the historic case of Bayer Corporation v. Natco Pharma Ltd. (2012) . A mandatory license to produce and market Sorafenib Tosylate, a life-saving medication for liver and kidney cancer that Bayer prices at INR 2.8 lakh per month, was given to Natco Pharma. Because Natco’s version cost INR 8,800, a wider range of people could afford the medication. The Court noted that the petitioner’s letter unequivocally demonstrated the voluntary license refusal. The Court ruled that authorities must take the number of patients in need of a patent medication into account when determining whether any drug must be provided at a reasonable cost. This ruling demonstrated India’s dedication to putting public health ahead of patent rights. But it also spurred discussions about how it would stifle international investment and creativity.
TRIPS AGREEMENT
TRIPS answers the concern of abuse of patent rights, by incorporating a provision on compulsory licensing, that is, the state can issue licences to manufacturers other than the patentee to produce, use or sell the product, without the consent of the patentee. Doha Declaration further enables developing countries to take benefits of the technology in developed nations through the mechanism of compulsory licensing. With the developed and developing countries taking opposite stands on the issue of patentability of lifesaving drugs, these international instruments are seen as an attempt to create a balance .
The flexibilities were reiterated in the Doha Declaration on TRIPS and Public Health (2001), which highlighted their importance in guaranteeing universal access to medications, particularly in poor and least-developed nations. WTO members may sanction compulsory licensing for public health emergencies under Article 31 as long as patent holders receive fair compensation. Article 31 of the TRIPS Agreement deals with compulsory licensing in case of patents, although TRIPS phrases it as ‘other use without authorization of the right holder’. It allows such authorization under certain conditions, like prior efforts to obtain, authorization from the patentee.
DEVELOPMENT, CHALLENGES AND WAY FORWARD
TRIPS in the process has become a platform for heated debate. Developing countries want a relaxation of the law as they argue that patent protection prevents millions of people from accessing life-saving drugs, forcing these countries to devote their limited resources to development of such drugs. They also argue that increased patent protection will lead to higher pharmaceutical prices. On the other hand, developed countries are arguing for a stronger protection in order to promote development of the pharmaceutical industry .
Challenges are likely, Innovation and Investment, it is contended that mandatory licensing could discourage foreign investment in research-intensive sectors like pharmaceuticals and disincentivize innovation. Implementation convolution, obtaining and enforcing compulsory licensing entails a number of procedural difficulties, such as settling disputes and figuring out how much patent holders should be paid. International Pressure, called a “patent-unfriendly” jurisdiction, India has been under fire from developed countries and global firms for its position on forced licensing.
The principle of territoriality is at the heart of IP law. The principle is reinforced by the need to preserve the sovereignty of states and allow them the flexibility to determine the domestic IP policies that best suit their social and economic agenda.
Articles 8 and 30 of TRIPS Agreement provide other viable alternatives apart from Article 31 route of compulsory licensing.
CONCLUSION
One important tool for striking a balance between the defense of intellectual property rights and the advancement of the general welfare is compulsory licensing. In India, the government can use compulsory licensing to address public health issues, guarantee access to necessary medications, and promote innovation fairness thanks to the legal framework established by the Patents Act, 1970. The TRIPS Agreement offers a well-balanced structure that upholds international IP rules while allowing for flexibilities like mandatory licensing. India has established a standard for developing countries looking to strike a balance between innovation and accessibility through its proactive use of these measures.
India needs to use a multifaceted approach in order to overcome these obstacles. The negative effects of compulsory licensing can be lessened by enhancing procedural clarity, encouraging local production of patented goods, and developing public-private partnerships to stimulate innovation. In conclusion, more than just a legal requirement, compulsory licensing is a socioeconomic instrument that emphasizes countries’ moral and ethical obligations to put public health ahead of monopoly profits. When used wisely, it might revolutionize health-care accessible in India, add to the global conversation about intellectual property, and provide a more just framework for striking a balance between innovation and the general good.
