India: License Of Rights In Patents

Last Updated: 10 April 2018
Article by Suchi Rai

'License of Rights' seems a good option for Patentees, who are seeking to license their patents, but do not have resources and time for commercialization of Patents yet want to benefit from their Patents. Although other countries have provision for 'License of Rights' in Patents, India does not have this provision in Patent Law.

Introduction

License of Right Proposal means the patent proprietor can request for making an entry in the Register of Patents maintained by Patent Office that the Patent is available for license. Thereupon, interested parties can apply for getting license under the Patents of their interest which are endorsed with 'License of Right' in the Register of Patents. The Patentee gets benefit from Patent Office also, for registering his patents to be endorsed with the term 'License of Right', by getting 50% rebate on renewal fee for the term of the Patent.

There is no provision for the Registration of 'License of Right Proposal' in Indian Patents Act, 1970. Here, it would be worth mentioning that prior to Second Amendment [2002] in the Indian Patent Act, 1970, relevant provision was available under Section 86. But after the amendment in 2002 the provision has been deleted. The amended Patents Act, 1970 does not have provisions with respect to "Licenses of Rights".

Provision in other countries:

Provision with regards to 'License of Rights' in Patents is available under the Patent Laws of England, Germany and Singapore.

8Section 46 of the UK Patent Act 1977, provides a patent proprietor with the option of having an entry made in the register that licenses are available as of right under a patent. By having a patent endorsed with 'licenses of right', a patent proprietor effectively offers any third party, the opportunity to have a license under the patent, on reasonable terms. If the terms of a license cannot be agreed between the parties, then the UK Patent Office will set the license terms. The patent owner, in return for registering his patent, gets some rebate in the renewal fees that he is supposed to pay. Section 47 of the Act, allows the proprietor to cancel the entry that licenses are available as of right, provided that the outstanding renewal fees are paid in full, as if the entry had never been made in the first place, and that there is no existing license under the patent. If licenses have been granted under the Patent, then a cancellation of the 'licenses of right' entry requires the consent of all licensees.

Indian Scenario:

License of right provision was abolished being non-compatible with TRIPS.

A 'license of right provision had a place in the Patent Act of 1970.

The Patent Amendment Act 2002, abolished the provision with regards to Licenses of Rights, as it was found to be inconsistent with some of the provisions of TRIPS Agreement i.e. Article 31 (a) of TRIPS Agreement which lays down that use of Patent without authorization of the patentee to be considered only on individual merit.

9The governmental power to supersede a patent to provide urgently required medicines to public under the 'License of Right' provision (Section 86 of the old Indian Patents Act 1970) was removed because it was considered to be non-compatible with TRIPS.

The Patent Act 1970, had relevant provisions, which now stand repealed:

1086. Endorsement of patent with the words 'Licenses of Rights'

(1) At any time after the expiration of three years from the date of the sealing of a patent, the Central Government may make an application to the Controller for an order that the patent may be endorsed with the words 'Licenses of right' on the ground that the reasonable requirements of the public with respect to the patented invention have not been satisfied or that the patented invention is not available to the public at a reasonable price.

(2) The Controller, if satisfied that the reasonable requirements of the public with respect to the patented invention have not been satisfied or that the patented invention is not available to the public at a reasonable price, may make an order that the patent be endorsed with the words 'Licenses of right'.

(3) Where a patent of addition is in force, any application made under this section for an endorsement, either of the original patent or of the patent of addition, shall be treated as an application for the endorsement of both patents, and where a patent of addition is granted in respect of a patent which is already endorsed under this section, the patent of addition shall also be so endorsed.

(4) All endorsements of patents made under this section shall be entered in the register and published in the Official Gazette and in such other manner as the Controller thinks desirable for bringing the endorsement to the notice of manufacturers.

87. Certain patents demand to be endorsed with the words 'Licenses of Rights'

(1) Notwithstanding anything contained in this Act,

every patent in force at the commencement of this Act in respect of inventions relating to-

(i) substances used or capable of being used as food or as medicine or drug;

(ii) the methods or processes for the manufacture or production of any such substance as is referred to in sub-clause (i);

(iii) the methods or processes for the manufacture or production of chemical substances (including alloys, optical glass, semi-conductors and inter-metallic compounds),

shall be deemed to be endorsed with the words 'Licenses of right' from the commencement of this Act or from the expiration of three years from the date of sealing of the patent under the Indian Patents and Designs Act, 1911, whichever is later; and

(b) every patent granted after the commencement of this Act in respect of any such invention as is referred to in section 5 shall be deemed to be endorsed with the words 'Licenses of right' from the date of expiration of three years from the date of sealing of the patent.

(2) In respect of every patent which is deemed to be endorsed with the words 'Licenses of right' under this section, the provisions of section 88 shall apply.

88. Effect of endorsement of patent with the words is 'Licenses of Rights'.

(1) Where a patent has been endorsed with the words 'Licenses of right', any person who is interested in working the patented invention in India may require the patentee to grant him a license for the purpose on such terms as may be mutually agreed upon, notwithstanding that he is already the holder of a license under the patent.

(2) If the parties are unable to agree on the terms of the license, either of them may apply in the prescribed manner to the Controller to settle the terms thereof.

(3) The Controller shall, after giving notice to the parties and hearing them and after making such inquiry as he may deem fit, decide the terms on which the license shall be granted by the patentee.

(4) The Controller may, at any time before the terms of the license are mutually agreed upon or decided by the Controller, on application made to him in this behalf, by any person who has made any such requisition as is referred to in sub-section (1), permit him to work the patented invention on such terms as the Controller may, pending agreement between the parties or decision by the Controller, think fit to impose.

(5) In the case of every patent in respect of an invention referred to in sub-clause (i), or subclause (ii), of clause (a) of sub-section (1) of section 87 and deemed to be endorsed with the words 'Licenses of right' under clause (a) or clause (b) of that sub-section, the royalty and other remuneration reserved to the patentee under a license granted to any person after such commencement shall, in no case exceed four per cent of the net ex-factory sale price in bulk of the patented article (exclusive of taxes levied under any law for the time being in force and any commissions payable) determined in such manner as may be prescribed.

(6) Save as otherwise provided in sub-section (5), the provisions of sub-sections (1), (2), (4) and (5) of section 93 (regarding the powers of the Controller) and of sections 94 and 95 shall apply to Licenses granted under this section as they apply to Licenses granted under section 84.

All these sections with regards to Licenses of Rights were repealed with amendment in 2002.

Current perspective:

Under the current scenario in India, Patent provisions related to 11Compulsory Licensing exists, whereby any person interested may make an application to the Controller for grant of Compulsory license on Patent, at any time after the expiration of three years from the date of grant of a patent on specific grounds such as, reasonable requirements of public with respect to patented invention have not been satisfied, patented invention is not available to public at reasonably affordable price, or the patented invention is not worked in the territory of India.

Conclusion:

License of Rights in Patents seems a good opportunity for Patentees to license their patented inventions for commercialization. The Patentees too benefit as they get rebate in renewal fee for registering their Patents to be endorsed with 'License of Rights'. Such provision can help Patentees to license their invention easily and to a good mass to make benefit out-of Patents for which they do not have resources for commercialization.

Footnotes

8 www.itssd.org

9 http://www.idma-assn.org/patents/html

10 http://ipindia.nic.in/ipr/patent/patents.htm

11 Section 84 of Patents Act 1970.

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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