AN ANALYSIS OF COMPULSORY LICENSING IN INDIA DURING THE PANDEMIC TIMES
Updated: Sep 14, 2020
Compulsory licenses are commonly described as 'authorizations authorizing a third party to formulate, make use of or sell a patented invention without the consent of the patent’s owner.’ Chapter XVI of the Indian Patent Act, 1970, (“IPA”) explains the provision involving compulsory licensing. The chucks to be fulfilled to be given a compulsory license are set out in Sections 84 and 92 of the Act. While issuing the compulsory license, the Patent Office must bear in mind a few considerations. These include the character of innovation. If any steps were already taken by the patent proprietors or any licensee to make full use of the invention, the applicant's capability to work the invention to the public benefit and the time beyond the Patent was issued, i.e., whether it worked or not. Through the course of this article, the author traces the qualifying criteria and evolution of compulsory licenses (which were a novel and widely celebrated concept) specifically in India and argues their relevance and need in current times, when the fatal COVID-19 pandemic is ravaging the entire world.
STATUTORY PROVISIONS GRANTING COMPULSORY LICENSING
Section 84, 92 (A), 92 (A) (1) are the relevant section of the Indian Patent Act, 1970, which have a mention of compulsory licensing and other requisites of it. As per Section 84 of IPA, any person can request the Controller for grant of a compulsory license on expiry of three years provided certain conditions are met. Alternatively, compulsory licenses can also be issued suo moto by the Controller under section 92 under specific circumstances like National Emergency, extreme urgency.
Interestingly, Section 92 has never been invoked in the short lifespan of compulsory licensing. One could argue that the reason for the same is that such an unprecedented disaster or national emergency had not revealed itself, until now.
TEST FOR COMPULSORY LICENSING
Before we can dive into contemporary circumstances, let us first understand the jurisprudence that has developed about compulsory licenses. This is essential to gauge the attitudes of Indian courts towards them.
Only one compulsory license has been granted in India to date, in the case that we will shortly discuss. This case, along with a few others, has together produced a kind of ‘test’ for compulsory licensing.
Nexavar Case [E2] was the first (and only) Indian case where the compulsory license was granted to Natco Pharma to manufacture and sell a drug named Sorafenib. The reason behind such a grant was high and unaffordable prices in India. But in the BDR Pharma Case, application for grant of license was denied by the Controller as the application was filed without following the required process stated in Section 84 (6) of IPA. Controller also stated that the word ‘effort’ and ‘reasonable’ should be according to mutual deliberation. Further, in LEE Pharma Case, compulsory licensing was rejected as they failed to produce necessary verification and assure the ground mentioned in Section 84(1) of the IPA.
1. Thus, it has been observed that the court examines the authenticity, proactive demeanor, and hard work of the claimant towards the patent holder to endowment the voluntary license stated in Section 84 (6)iv. Considering the above cases, the following three tests apply to meet reasonable requirements under the Act and qualify a compulsory license to a third-party: Whether in accumulation to the patented drug there is a substitute available for the identical disease which is available to the general public at a rational cost;
If no alternative is accessible, then to check whether the patented drug is offered to the general public by manufacturer or the patentee at the reasonable cost;
Evaluation of cost of the anticipated drug, patentee’s drug, and alternative drugs.
Further, the Controller takes into account some more factors. Still, the eventual discretion lies with him to grant the obligatory license. Even after compulsory permission is granted to a third party, the patent owner still has rights over the Patent, including a right to be remunerated for copies of the products ended beneath the compulsory license.
Only if the Controller is satisfied, after careful analysis and following due procedure, is the compulsory license granted. Subsequently, the application is published in the Official Journal. In case of non-acceptance, the applicant is notified, and they can request a hearing at the 'Controller’s office if they so wish.
TERMS AND CONDITION RELATING TO COMPULSORY LICENSING
Once the Controller agrees to grant a compulsory license, he will set the required terms and conditions necessary in such licensing. Controller also decides the royalty or remuneration payable to the patentee taking into consideration the following factors:
1. Patentee’s investment in his invention;
2. Implementation of such an invention;
3. Whether such invention is sold at a reasonable price or not;
4. Terms of the license;
The license should be non-exclusive, non-assignable, and should be for a balance term and can be used for non-commercial purposes. The Controller will also elucidate the provisions relating to the import and export of such a patented item.
If public interest warrants it, the government can direct the Controller to authorize the licensee of the patent to undertake a range of actions. These include importing the patented article, or an article made using the patent (subject to conditions that the government feels necessary to impose).
The patentee can file the opposition for grant of such licensing within two months from such publication in official journal via Form 14.
The Controller has the power to terminate such a grant via Form 21 if the circumstances under which the license was granted terminate to exist.
COVID-19 & COMPULSORY LICENSING
Declared a pandemic by the World Health Organization in March 2020, this novel virus has proven to be a challenge the human race never expected. It is a disaster that still has governments scrambling, and global systems of trade and production in disarray. In the context of such a time, we begin to understand how closely intricately connected the entire world is, and how a ripple that starts in one part of the ocean quickly travels all around, unaffected by man-made borders. People around the world wait with baited breath, for a miracle – for a cure. As vaccines are developed around the world, compulsory licenses have once again come to the forefront of the conversation.
A crisis very much like today's in 2001, forced the World Trade Organization to strike a balance between intellectual property and public health, which resulted in the famous Doha Declaration. It has become painfully obvious that the vaccine will ultimately be developed by a wealthier country, whose private corporations will have profit, not public interest, at heart. Thus, once again, low- & middle-income countries around the world are beginning to realize that without their heightened intervention, any cure to the Coronavirus might be a fantasy for the lower echelons of their society. We have already begun to see real-world translations of these fears.
Ecuador, and Chile, have already laid the groundwork for compulsory licenses. Although, this tool is also being employed by decidedly richer countries such as France, Germany, and Canada. Israel has already granted a compulsory license.
It remains to be seen, however, if there will be push back by the major lobbies via the WTO, as was observed in previous uses of compulsory license. It is hoped, albeit naively, that the scale and magnitude of the current health crisis will ensure easy availability of the future vaccine to all, equitably.
In today's world, Intellectual Property Rights (IPR) had rapidly gained an essential position within both international and domestic law. The compulsory licensing of patents proves to be a step in the right direction. An exception to the strict rule of exclusive enjoyment of intellectual property, licensing mandatory recognizes the trend of globalization, providing an avenue through which essential patented items such as medicines can still be reproduced. In India, as we have already explored, there are many cogent conditions and tests that have to be met for the granting of a compulsory license under various Indian statutes. The Nexavar case makes clear that in the event of public suffering induced by exorbitant medicine rates, either the market-forces or the government will step in to resolve the tension. The COVID-19 pandemic could set progressive precedents for compulsory licensing around the world, not just India. The balance that compulsory licenses were conceived to strike, between public health and profit, has never been more apparent. Thus, while intellectual property must always be safeguarded, and the inventor should be given due credit and incentives, it simply cannot come at the cost of human lives.
Title Image Source: intepat
This article has been written by Shrey Goyal who is currently a law student at NLUJAA,Assam. He is extremely passionate about constitutional, IP, and Human Rights law.