To read Part 1 on this blog topic, click here.

Section 92

Under Section 92 of the Act, compulsory licenses can be granted on notification by Central Government:

1.  In a case of a national emergency (including a public health crisis), extreme urgency or in the event of public non-commercial use; (Section 92(1)); or

2.  For export (Section 92A(1)).

Emergency: With respect to compulsory licenses granted as a result of national emergency, extreme urgency or as a result of public non-commercial use, such licenses are published by Central Government in the official gazette.  Once these licenses are published, the Controller will grant a compulsory license to any interested person who applies for such a license.  The granting of compulsory licenses under section 92(1) cannot be challenged by the patentee either through an opposition proceeding or in court. However, the Controller is required to notify the patentee of the granting of the compulsory license under this section.

Export: With respect to compulsory licenses granted for export, such licenses may be granted for the manufacture and export of patentedpharmaceutical products to any country having insufficient or no manufacturing capacity in the pharmaceutical area relevant to the patented pharmaceutical product in order to address “public health problems”.  Compulsory licenses will only be granted under Section 92A(1) if the country experiencing the “public health problems” has already granted a compulsory license for the patented pharmaceutical product at issue or if the Government of that country has provided notice in the country’s Official Gazette, with respect to the pharmaceutical patented product to be imported from India.  In these instances, the Controller will grant a compulsory license to an applicant on certain terms and conditions (which will be published) and only for manufacture and export of the patented pharmaceutical product to the country in question.  The Controller will also determine the compensation to be paid to the patentee.

License Revision and Termination

Twelve (12) months after the licensee has worked the invention on a commercial scale, the licensee of a compulsory license may make an application to revise the terms and conditions of the license on the ground that the terms and conditions settled upon have proven to be more onerous than originally expected and as a consequence thereof, the licensee is unable to work the invention except at a loss.  The application must include facts and evidence to support the application as well as the remedy or relief sought by the license holder.  The license holder may request a hearing.  The Controller will review the application and after the hearing, will grant or deny the application.  If the application is granted, the Controller will revise the terms and conditions of the compulsory license. However, such an application for revision of a compulsory license shall not be entertained more than once.  Given that Bayer received a 1% increase in the royalty rate by IPAB, it will be interesting to see if after one year Natco will attempt to have the royalty rate reduced back to 6%.

A compulsory license can be terminated if the circumstances under which the license was granted no longer exist and are not likely to recur.  The patentee (or another party in interest) may filed an application in the Indian Patent Office with supporting evidence requesting that the compulsory license be terminated.  The compulsory license holder will be provided with a copy of the application and has a period of one (1) month from the date of receipt of the application to object to the application.  If the license holder objects to the application, he/she must notify the patentee (or other interested party) and the Controller of his/her objection.  After receipt of such an objection, the Controller will hold a hearing and decide the application based on the facts and evidence submitted by the parties.  If the Controller decides to terminate the compulsory license, he shall issue an order providing the terms and conditions of such termination and serve copies of the order on both the licensee and compulsory license holder.

Compulsory Licenses in India

As mentioned above, the IPAB upheld the compulsory license to Nexavar® on March 4, 2013, which was originally granted by the Controller in March 2012.  Since 2012, compulsory licenses have been granted or are in process of being granted for several pharmaceutical products as shown by below:

Compulsory licenses issued in other countries

India is not the only country that has issued compulsory licenses for patented pharmaceutical products.  While the compulsory license laws vary country-by-country, as shown in the below table, compulsory licenses have been issued by several countries for a number of different pharmaceutical products:

The issue of compulsory licenses in India is something that every company should be concerned about when procuring patents and conducting business in India.  While most of the recent attention has centered on compulsory licenses for patented pharmaceutical products, it is important to remember that India’s Patent Act provides for broad compulsory license provisions that are not limited to just pharmaceutical products but encompass products from any technology.

Thanks to the Chadha & Chadha firm for providing their insights to the BRIC Wall on compulsory licensing.