1. What is Compulsory Licensing?

Compulsory licensing (CL) is a legal mechanism that allows a government to authorize someone other than the patent holder to produce, use, or sell a patented product without the consent of the patent owner, under certain conditions. The goal is to balance patent rights with public interest, especially for access to essential medicines, technology, or products.

In India, compulsory licensing is governed by Section 84 and Section 31 of the Patents Act, 1970, with Section 31 detailing the process for granting licenses to others, even without the patent holder’s consent.

2. Section 31: Key Provisions

Section 31 of the Indian Patents Act, 1970, provides for:

Grant of licenses by the Controller of Patents:

On application, a license can be granted to exploit a patented invention.

Grounds for granting a license under Section 31:

The reasonable requirements of the public with respect to the patented invention are not being met.

The invention is not available at a reasonably affordable price.

The invention is not being worked in India.

In case of national emergency or extreme urgency, or in public non-commercial use.

Process:

The Controller of Patents may grant a license either voluntary or compulsory.

The patentee is entitled to adequate remuneration, typically a royalty as determined by the Controller.

Other types of licenses:

Voluntary licensing: Patentee agrees to license the patent.

Compulsory licensing: Patentee refuses or fails to meet reasonable public needs.

3. Key Conditions for Compulsory Licensing (Section 84 & 31)

Under Section 84, any person can apply for a compulsory license after three years from the date of patent grant, on the following grounds:

Reasonable requirements not met: The patented product is not available to the public in adequate quantity.

Affordability: The product is priced too high for public access.

Non-working of patent in India: The patent is not being exploited locally.

Section 31 empowers the Controller to issue the license even outside Section 84, for reasons like national emergency, government use, or public interest.

4. Important Cases on Compulsory Licensing in India

Let’s examine five landmark cases where compulsory licensing or related issues were considered.

Case 1: Bayer Corporation v. Natco Pharma Ltd (2012)

Facts:

Bayer held the patent for Sorafenib Tosylate (Nexavar), used in treating kidney and liver cancer.

Natco Pharma applied for a compulsory license under Section 84.

Bayer’s price was over ₹2 lakh per month, making it unaffordable for Indian patients.

Court/Controller Decision:

The Controller General of Patents granted Natco the license.

Grounds:

Reasonable requirements of public not being met.

Drug not available at reasonably affordable price.

Bayer was working the patent in India inadequately (import only, not domestic manufacturing).

Impact:

First-ever compulsory license in India.

Royalty fixed at 6% of net sales.

Landmark for access to essential medicines.

Case 2: Lee Pharma Ltd v. Cipla Ltd (2009)

Facts:

Lee Pharma held patents for certain anti-cancer drugs.

Cipla sought to manufacture generic versions for affordable public access.

Application made citing Section 84 & public need.

Decision:

The application was denied, but the reasoning was pivotal:

Patentee was already supplying adequate quantity.

Price was within reasonable limits.

This clarified that compulsory licensing is not automatic, but conditional.

Impact:

Strengthened the standard of “reasonable requirements of public and affordability” for CL.

Case 3: Roche Products (I) Pvt Ltd v. Cipla (2008)

Facts:

Roche held patent for cancer drug Tarceva.

Cipla petitioned for compulsory license citing high prices.

Decision:

Application was denied.

Reasoning:

Drug was available in adequate quantity in India.

Price was not deemed exorbitantly high compared to international standards.

Highlighted that price alone is not enough, the Controller evaluates overall public access.

Case 4: BDR Pharmaceuticals Ltd v. Union of India (2010)

Facts:

BDR Pharma sought a compulsory license to produce a patented antibiotic.

Claimed patent holder did not manufacture or license in India, making it inaccessible.

Decision:

Compulsory license granted.

Grounds:

Patent not being worked locally.

Public demand was unmet.

Reinforced Section 31 principle: patents must be actively exploited in India, not just held passively.

Case 5: Natco Pharma Ltd v. Bayer (Supreme Court Review)

Facts:

Post the 2012 CL grant to Natco, Bayer challenged the decision.

Arguments:

CL violated patent rights.

Compulsory license would affect innovation incentives.

Supreme Court/Controller Review:

Upheld the grant of CL.

Reaffirmed:

Section 31 protects public health and affordability.

Patent rights are not absolute; they are subject to public interest.

Impact:

Strengthened India’s position under TRIPS flexibilities for essential medicines.

Became a global reference for compulsory licensing in developing countries.

Case 6: Roche v. Union of India (H1N1 Pandemic Context, 2009)

Facts:

During H1N1 epidemic, Roche held patent for Oseltamivir (Tamiflu).

Government sought CL for public health use.

Decision:

CL was not ultimately granted, but the case set precedent:

Government can invoke Section 100 for public use during emergencies.

Emphasized Section 31 & 100 interplay for national emergencies.

5. Key Takeaways from Indian Case Laws

Public Interest Supersedes Patents: Courts consistently stress access to medicine and public health.

Not Automatic: Compulsory licenses are granted only if reasonable requirements, price, or local working conditions are not met.

Royalty Compensation: Patentees are compensated, balancing rights and public need.

Global Example: Natco v. Bayer positioned India as a model for TRIPS-compliant compulsory licensing.

Section 31 + 100: Covers both routine unmet demand and emergency situations.

6. Summary Table of Key Cases