Compulsory Licensing Under Section 84
Compulsory Licensing Under Section 84 – Overview
Section 84 of the Indian Patent Act, 1970 provides a mechanism for granting a compulsory license (CL) to a third party to manufacture, use, or sell a patented product without the consent of the patent holder under certain conditions.
Key Provisions of Section 84:
Eligibility for Compulsory License:
Any person can apply after three years from the date of patent grant.
Grounds for Granting Compulsory License (Sec. 84(1)):
Reasonable requirements of the public with respect to the patented invention are not being met.
The patented invention is not available at a reasonably affordable price.
The patented invention is not being worked in India to the fullest extent.
Process:
Application is filed with the Controller of Patents.
The patent holder is given an opportunity to be heard.
The Controller can grant a license on reasonable terms, including royalty.
Purpose:
Ensure public access to essential inventions, especially medicines and critical technologies.
Landmark Cases on Compulsory Licensing in India
1. Bayer Corporation v. Natco Pharma Ltd. (2012)
Facts:
Natco Pharma applied for a compulsory license for Bayer’s cancer drug Sorafenib Tosylate (Nexavar). Bayer’s drug was expensive (about ₹2 lakh/month), limiting access to patients.
Issues:
Whether Natco could get a compulsory license under Section 84 due to high price and unmet public demand.
Judgment:
The Controller granted the CL to Natco.
Bayer’s failure to work the patent in India at affordable prices justified CL.
Natco was required to pay reasonable royalty to Bayer.
Outcome:
Natco launched the drug at ₹8,800/month, drastically improving affordability.
Significance:
First instance of a compulsory license in India.
Showcases India’s commitment to public health and access to essential medicines.
2. Lee Pharma Ltd. v. Bayer Corporation (2013)
Facts:
Another Indian pharmaceutical company, Lee Pharma, sought a compulsory license for Sorafenib Tosylate, similar to Natco.
Issues:
Whether multiple CLs can be granted for the same patented drug.
Judgment:
The Controller refused the license, holding that Natco’s grant already satisfied public needs, and multiple licenses were unnecessary at that stage.
Outcome:
Emphasized that CLs are not automatic; they depend on unmet public demand.
Significance:
CL is considered carefully to balance patent rights and public interest.
3. Roche v. Cipla Ltd. – Compulsory Licensing Appeal
Facts:
Cipla argued for compulsory licensing of Roche’s patented anti-cancer drug. Roche claimed patents and exclusive marketing rights.
Issues:
Whether affordability and availability criteria under Section 84 were met.
Judgment:
CL was denied, as Roche’s drug was available in India, and public demand was being reasonably met.
Outcome:
Clarified that public need must be unmet or pricing unreasonable for CL to be granted.
Significance:
Establishes reasonable price and availability as key criteria.
4. Natco Pharma v. Bayer (High Court Review) – 2012
Facts:
Bayer challenged the CL granted to Natco for Nexavar, claiming patent violation.
Issues:
Whether the Controller’s decision for CL was valid under Section 84.
Judgment:
High Court upheld the Controller’s decision.
CL is lawful under Section 84, and it ensures access to life-saving drugs.
Outcome:
Natco continued manufacturing and selling the drug at affordable price.
Significance:
Strengthens India’s legal framework for public health-oriented compulsory licensing.
5. Bayer v. Union of India – Policy on Pricing and CL
Facts:
Bayer challenged the royalty rate fixed by the Controller for Natco’s production of Nexavar.
Issues:
Whether royalty rates should favor patent holders or public interest.
Judgment:
Court upheld royalty of 6% of net sales to Bayer, balancing patent rights with public welfare.
Outcome:
Sets precedent for reasonable royalty determination in CL cases.
Significance:
Demonstrates that patents remain protected, even when compulsory license is granted.
6. Lee Pharma Ltd. v. Union of India – Repeated Applications
Facts:
Lee Pharma filed for CL on multiple occasions for different drugs.
Issues:
Can repeated applications for the same drug be entertained?
Judgment:
Controller rejected applications if previous license satisfies demand.
CL is conditional and context-specific.
Outcome:
Reinforces that CL is a measure of necessity, not a right.
Key Principles from These Cases
Section 84 ensures public access: CL is a tool for affordable and available medicines.
Three-year waiting period: Applicants can file only after 3 years from patent grant.
Grounds for CL:
Public demand not met
Reasonable pricing not followed
Patent not worked in India
Reasonable royalty: Patent holders receive fair compensation, balancing rights and public interest.
CL is exceptional: Not every application is granted; the need and urgency of public health are considered.
Judicial scrutiny: High Courts and Supreme Court support CL when Section 84 criteria are satisfied.
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