India: Contemplating Compulsory Licensing: A Comparison Between The Components

Last Updated: 29 August 2008

Compulsory licensing is the "buzz-word" doing the rounds of the Indian Pharma Industry. With the first compulsory license application for anti-cancer drugs being underway, the law governing the regime finds itself under the speculative eye. The Patents Act, 1970, provided for the "Compulsory Licenses" regime in India vide Section 84 of the Act. The provisions following the section elucidate and expand upon the same, stating some of the specifics, governing the grant of a Compulsory Licenses. Section 92A, a fall out of the Patents (Amendment) Act 2005, explicates "Compulsory License for export of patented pharmaceutical products in certain exceptional circumstances", a fall-out of the TRIPs agreement. India was one of the front-runners to the proposal on the issue, discussed in the Doha Round of the WTO Meet.

The two sections included under the same chapter of the Act, contain in themselves a stark difference on certain prominent fronts. Section 84 clearly demands a lapse of a three year period to have taken place before a Compulsory Licensing application be made, while Section 92A is silent on this front. As regards the applicant, the general provision allows any person, notwithstanding a licensee of the patented product to be an eligible applicant. The provision on Compulsory Licensing for export, however states that a compulsory license shall be "available" to an applicant to enable manufacture and export to any country having insufficient or no manufacturing capacity in the pharma sector for the product to address public health problems.

Section 84(1) elucidates grounds that may facilitate the grant of a compulsory license. The grounds stated therein are:

  1. Reasonable requirements of the public with respect to the patented invention not satisfied

  2. Patented invention not available at a reasonable price to the public

  3. Patented invention not worked in India

Section 92A on the other hand, lays down that the grant of compulsory licenses be restricted to the purposes of manufacture and export to a country, with insufficient or no manufacturing capacity, in the prevalence of a public health situation. Further, it appears that the terms and conditions determining the grant of the Compulsory License, as under Section 92A, shall be as decided by the Controller, however no amplification on the same has been made. Section 92A states that any of the provisions that deal with export of pharmaceutical products are applicable to it.

Section 84(6), stating the 'Considerations of the Controller' states "measures taken by the patentee or licensee to make full use of the invention, ability of applicant to work the invention, capacity of the applicant to undertake risk in providing capital and working the invention" as some of the primary considerations. Also, the fact regarding the applicant having made any efforts to obtain a license from the patentee on reasonable terms and conditions and that such efforts proved unsuccessful within a reasonable period, is considered. (The explanation appended to the sub-section clarifies that the 'reasonable period' of time as considered by the Controller may not exceed a period of six months.) The statute also provides the applicant an exemption from his attempt to obtain a license from the patentee in the event of a national emergency, extreme urgency, public non-commercial use and anti-competitive practices. The incorporation of this provision is clearly in sync with Art. 31(b) of the TRIPS Agreement. The condition of "reasonable requirements of the public not deemed to be satisfied" (as proposed under Section 84(1) (a)) has been spelled out under Section 84(7) of the Act. Section 92A while being silent on these very aspects, does not refer one back to the standards as under Section 84.

Section 92A, a more recent inclusion into the statute, has been availed of for the first time by Natco Pharma, in its compulsory license application. The statute being silent on various considerations and concerns, seems to have induced the Controller into allowing Pfizer' participation in the hearing. The law on the aspect, still being in the infant stage is bound to be surrounded by speculations and storm. As authorities attempt to suture and stitch the gaps over, the cloud around will clear itself only vide the pronouncements that shall be issued by the Controller in the days to come.

© Lex Orbis 2008

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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