Compulsory licences — Intellectual Property Rights I Notes

Compulsory licences

In March 2012, India granted its first-ever compulsory licence: Natco was allowed to make Bayer’s kidney-cancer drug Nexavar, dropping the price from about ₹2.8 lakh a month to ₹8,800. The patent stayed with Bayer; the public got the medicine. That is the compulsory-licence idea in one case.

What a compulsory licence is

A compulsory licence is a licence the Controller grants to a third party to work a patented invention without the patentee’s consent, in the public interest. It is the main check on a patentee who sits on a patent or overprices it.

Grounds — s.84(1). After three years from grant, any interested person may apply on the ground that:

• the reasonable requirements of the public with respect to the invention have not been satisfied; or
• the patented invention is not available to the public at a reasonably affordable price; or
• the patented invention is not worked in the territory of India.

The Controller weighs the nature of the invention, the applicant’s ability to work it, and the public interest (s.84(6)), and fixes a royalty for the patentee.

Other routes. Under s.92, the Central Government may notify compulsory licences in circumstances of national emergency, extreme urgency, or public non-commercial use (e.g. an epidemic). Under s.92A, compulsory licences may be granted for export of medicines to countries with insufficient manufacturing capacity.

Patents Act, 1970, s.84(1): “At any time after the expiration of three years from the date of the grant of a patent, any person interested may make an application to the Controller for grant of compulsory licence on patent on any of the following grounds, namely — (a) that the reasonable requirements of the public with respect to the patented invention have not been satisfied, or (b) that the patented invention is not available to the public at a reasonably affordable price, or (c) that the patented invention is not worked in the territory of India.”

In Simple Terms: If a patentee, three years after grant, is not meeting public demand, is charging too much, or is not making the product in India, the Controller can let someone else make it — paying the patentee a royalty. The patent survives; the monopoly bends to public need.

🧩 WORKED EXAMPLE — the three-year, three-ground test

Facts. Two years after grant, an applicant seeks a compulsory licence on a patented drug, arguing it is too expensive.

Rule. s.84 — a compulsory licence may be sought only after three years from grant, on the affordability/availability/working grounds.

Apply. Only two years have passed, so the application is premature regardless of price. After three years, the “not reasonably affordable” ground would be available.

Conclusion. The application fails now for the timing bar; it could succeed after the three-year period — as in Natco v Bayer (2012).

flowchart TD
    CL["Compulsory licence"]:::root
    CL --> T["After 3 years from grant (s.84)"]:::leaf
    T --> G1["Public requirements not met"]:::leaf
    T --> G2["Not reasonably affordable"]:::leaf
    T --> G3["Not worked in India"]:::leaf
    CL --> EMG["s.92 — national emergency / urgency"]:::leaf
    CL --> EXP["s.92A — export of medicines"]:::leaf
    classDef root fill:#FFF8DC,stroke:#000,color:#000;
    classDef leaf fill:#E6F3FF,stroke:#1E3A8A,color:#000;

Case Laws

• Natco Pharma v Bayer Corporation (2012) — India’s first compulsory licence; all three s.84 grounds were satisfied for the anti-cancer drug Nexavar.
• BDR Pharmaceuticals v Bristol-Myers Squibb (2013) — a compulsory-licence applicant must first make a genuine effort to obtain a voluntary licence on reasonable terms.

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