A patent is a right granted to the owner to stop others from using his invention without his consent for making, using, selling or offering for sale his patent. Therefore, only on mutually agreed terms can other parties use the creator's patented invention and this gives rise to the concept of licensing. Licensing is a legal tool through which the patent rights can be transferred to any person who wishes to work the invention at any time before the expiry of patent. Through this, the patent owner authorizes the person (licensee) to utilize the patent rights upon agreed conditions.
Trade Related Aspects of Intellectual Property Rights (Trips)
The Doha Conference 2001 of WTO declared the necessity of giving priority to public health over IPR. It was decided in that conference that the countries have right to protect public health and provide cheap medicines and the member countries could decide on their own the terms and conditions for providing compulsory license.
In India, the concept of Compulsory Licensing is in play. It refers to a license given to a party to manufacture, sell or use the product or process which has been granted a patent without the permission of the owner. The conditions for compulsory licensing is covered under section 84 and 92 of the Indian Patent Act 1970 which states that:
Compulsory license will be granted on the following grounds (Section 84):
- 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 reasonably affordable price or,
- That the patented invention is not worked in the territory of India.
Section 92 of Patent Act, 1970, deals with other grounds on which the compulsory license will be granted. These are special provision for compulsory licenses on notifications by Central Government. Government grants compulsory licenses in the following grounds:
- For exports, if the product is used for exporting to another country then government can grant licenses but this is only in exceptional circumstances.
- If there is national emergency, where the product is needed on an urgent basis like in war or in health crisis.
Advantages of granting compulsory license:
- Compulsory license is important for providing affordable products such as medicines and drugs to the public. It ensures that such an invention is utilized for the public good instead of being reserved with the patentee, thus, proving beneficial for the underdeveloped and the developing countries.
- Compulsory license has provisions for concurrently rewarding the owner of the patent so that it continues to act as an incentive along with the product being used by the public.
- In cases where there isn't any financial strength of the patentee for production of the invention, the same can be granted to the licensee to carry out the production.
Natco Pharma Ltd. is the first company to file for compulsory licensing for producing generic version of Bayer's Corporation's patented medicine Nexavar. This drug was used in the treatment of kidney and liver cancer. The patent office in 2012 granted the compulsory license to Natco Pharma for the same drug for the reason that the public did not have access to this drug at affordable price and the patented invention was not worked in India. They stated that all the 3 conditions of sec 84 were fulfilled that,
- The reasonable requirements of the public were not fulfilled
- That it was not available at an affordable price
- Patented invention was not worked around in India.
So, Natco applied for the compulsory license under section 84 of the Patent Act for Bayer's patented drug Nexavar. Nexavar was available by the Bayer Corporation for $ 6299 for a month's course. Natco Pharma proposed that the same drug would be available by the name of Sorafenib Tosylate for just $196. It was proposed that it would benefit the whole population of India which is in millions. The government decided in favour of the general public health and granted the compulsory license to Natco Pharma.
In another case of compulsory licensing in India, Lee Pharma, a Hyderabad based Indian pharma company, filed an application for compulsory license (dated 29.06.2015) for the patent covering AstraZeneca's diabetes management drug Saxagliptin. The grounds alleged by Lee Pharma were that:
- the patentee has failed to meet the reasonable requirements of the public,
- the patented invention is not available to the public at a reasonably affordable price, and
- the patented invention is not worked in India.
However, all the three grounds of Lee Pharma were rejected by the Controller General and the Compulsory license application was refused on the ground that Lee Pharma failed to demonstrate what the reasonable requirement of the public was with respect to Saxagliptin. The Controller General also stated that Lee Pharma failed to show the exact number of patients being prescribed the patented drug and how many of them were unable to obtain it due to its non-availability and consequently it was difficult to hold whether manufacturing in India was necessary or not.
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