A Short Note on Compulsory License

Provisions and Interpretation

In India, the concept of compulsory license vis--vis granted patents is dealt
with under Chapter XVI of the Patents Act, 1970 (hereinafter the Act). The
conditions, which are statutorily required to be fulfilled, in order for a
compulsory license to be granted and the process related to the said grant,
are covered under Sections 84 to 94 of the Act. Details of such Sections and
the related Rules are contained in Annexure A.
According to Section 84 of the Act, any person interested1 notwithstanding
that he is already the holder of a license2 under the patent may make an
application to the Controller for grant of a compulsory license at any time
after the expiration of three years from the date of grant of a patent.3
An application for compulsory license can be filed on any of the following
grounds4:
1. the reasonable requirements of the public with respect to the patented
invention have not been satisfied; or
2. the patented invention is not available to the public at a reasonably
affordable price; or
3. the patented invention is not worked in the territory of India.
Section 84(7) enumerates the situations/conditions when the reasonable
requirements of the public are deemed not to have been satisfied.
1 Section 84(3) requires the applicant to set out
details pertaining to the nature its interest
2 Section 84(2)
3 Section 84(1)
4 ibid

While considering an application for grant of a compulsory license, the

Controller takes into account

the nature of the invention;

the time which has elapsed since the grant of the patent;
measures taken by the patentee for working the patented invention;
the ability of the applicant to work the invention;
the capacity of the applicant;
whether the applicant has made efforts5 to obtain a license from the
patentee on reasonable terms and conditions and that such efforts
have remained unsuccessful after passage of reasonable time period 6.

When on an application for compulsory license, the Controller is not satisfied

as to the existence of a prima facie case, he shall notify the applicant and
unless the applicant requests for a hearing in the matter, within one month
from the date of such notification, the Controller shall refuse the application.
When the Controller is satisfied that a prima facie case exists 7, he shall direct
the applicant to serve copies of the application upon the patentee. Once the
application is served on a patentee, the patentee can give a notice of
opposition to the Controller. This notice of opposition shall state the grounds
on which the application is opposed by the patentee.

5 BDR Pharmaceuticals v Bristol Myers Squibb Co., CL Appl no. 1/ 2013 In this
case, an application for compulsory license was refused to be entertained by the
Controller on the ground that reasonable efforts for seeking a voluntary license
have not been made by the Applicant.
Further, it is pertinent to note that the proviso specifically provides that such
requirement is not applicable in case of emergency, abuse of patent etc.

6 Section 84(6)(iv) Explanation provides that a time of period of 6

months will be regarded as reasonable time period

7 Section 87 details the procedure

The Controller will provide a hearing to both the applicant and the patentee.
During such hearing, it is open to both the parties to make submissions and
the patentee can provide an explanation or elaborate upon reasons as to
why the patented invention has not been worked in India despite expiry of 3
years after grant8. After the hearing, the Controller may or may not grant a
compulsory license.
If a compulsory license is granted by the Controller and despite the same a
patented invention has not been worked in India or the reasonable
requirements of the public has not been satisfied or the patented invention is
not available to the public at a reasonably affordable price an application
can be moved seeking revocation of the concerned patent.9
The purpose10 of granting compulsory license in India is to see that patented
inventions are worked on a commercial scale in the territory of India and that
the interest of any person working or developing the invention is not
prejudiced.
A compulsory license can be granted by notification by the Central
Government11 in circumstances of:
1. national emergency; or
2. extreme urgency; or
3. in case of public non-commercial use.
The procedures for obtaining a compulsory license need not be complied
with in the above mentioned conditions which may arise, including public
8Section 86 can be relied upon by a patentee to
seek an adjournment
9 Section 85
10 Section 89
11 Section 92

health crisis, relating to Acquire Immuno Deficiency syndrome, Human

Immuno Deficiency Virus, tuberculosis, malaria or other epidemics.

CONCLUSION
Compulsory license is granted only in extremely rare circumstances where a
patentee has grossly failed to work the patented invention in India or in case
of national emergency in India or abroad (to a country where an applicant
may want to export patented medicine). Further, it is of importance to note
that while deciding the issue of grant or non-grant of a compulsory license,
due hearing is given to a patentee and if a patentee is able to establish that
it was unable to work the patented invention due to genuine and bonafide
reasons beyond its control, ideally no compulsory license is granted. Thus, it
is only when an element of abuse of patent monopoly or national emergency
is attached with non-availability of a patented invention to the public at
large, that a compulsory license will be issued.
We would also like to point out that the Patents Act, 1970 specifically
provides that
a) Compulsory License will not be granted to an applicant solely for the
purpose of importing a patented invention. This establishes that the
basic intention behind grant of compulsory license is to ensure that
patent is worked in India and that a patented invention is available to
the public at large. (Sections 89 and 90 of the Act)
b) It is also open for a patentee to file an application seeking termination
of a granted compulsory license, if it is able to establish that
subsequent to the grant of the compulsory license, the circumstances
under which the same was granted no longer exist and that they are
unlikely to recur. (Section 94)

As a result, only in circumstances where a patentee despite passage of three

years after grant of a patent in respect of life saving drugs is unable to
provide the subject medicine (either by way of importation or by way of local
manufacturing) to the public at large that a compulsory license is granted.
Also while deciding the question of affordability and availability, initiatives
taken by a patentee relating to patients access programs etc. are always
taken into consideration.
In Bayer Vs. Natco compulsory license case, it has been clearly
stated that imports can also constitute working provided there are
circumstances which necessitate the imports. However, mere imports for no
reason except to keep the prices high can prove detrimental to patentees.
There are recent licensing models, which have proved to be successful in this
regard. In fact, in the case of Bayer Vs. NATCO a compulsory license was
granted in view of the fact that merely 340 units of (60 tablet pack) packs of
Nexavar were imported in India by Bayer Corporation over a period of two
years. (Detailed analysis is contained herein below)
The first Compulsory License (CL) was granted to Natco Pharma Ltd. (the
applicant), a generics drug company based in Hyderabad, India for Patent
Number

215758

covering

Sorafenib

Tosylate

proprietary

drug

manufactured by Bayer Corporation (the patentee) and sold under the name
Nexavar. As elucidated by the Controller himself, this was the first case of
compulsory licensing in India and that there were no precedents to guide the
Tribunal. Compulsory License is a provision under the TRIPS (Articles 30 and
31) to prevent the abuse of patent rights. It is an involuntary contract,
enforced by the Government, between a willing buyer and an unwilling seller.
It is also recognized by the Paris Convention (Article 5 (A)).
In Bayer Corporation v Union of India and others; 2014 Indlaw MUM
819 (challenge to the Compulsory License) the Court dwelled upon what is
reasonable requirement of public and noted:

The obligation to meet the reasonable requirement of the public is of

the patent holder alone either by itself or through its licensees;

The petitioner (Bayer) in its working statement filed with the Controller
on yearly basis did not include Cipla's sale of the infringed patented
drug as participating in meeting the reasonable requirement of public;

Question of reasonable requirement of the public is to be determined

on the basis of evidence led by the parties before the authorities;

Infringer's quantity of goods could not be taken into account because it

could stop on any day. It is only where the patent holder accepts the
infringer's participation in the market and grants him defacto license
could the infringer's supplies be taken into account;

Further dwelling upon if reasonable requirement of public was being met to

an adequate extent, it stated that adequate extent:

Depends on the nature of articles and would vary for luxury articles
and medicines.

In respect of medicines, the adequate extent test was purported to be

100% i.e. to the fullest extent.

In the same judgment reasonably affordable price is noted as:

The reasonably affordable price to be arrived at on the basis of the

evidence led by the parties of their respective prices. The obligation of
the authorities under the Act was with regard to grant, control and
revocation of patent and not price determination of the patented
invention;

Patient Assistance Program could not be used to arrive at reasonably

afford price as PAP was a charity. The decision whether or not to extend
the charity would be sole prerogative of the donor i.e. the petitioner;

On the issue of public interest the Court held that:

The law of patent is a compromise between interest of the inventor

and the public.

Public interest is and should always be fundamental in deciding a lis

between the parties while granting a compulsory license for
medicines/drugs.

On the Working Requirement, the Court held that:

Working requirement to be decided on a case-to-case basis;

When a patent holder is faced with an application for Compulsory

License, it is for the patent holder to show that the patented invention/
drug is worked in the territory of India by manufacture or otherwise;

Manufacture in all cases may not be necessary to establish working in

India;

In Novartis AG Vs Cipla Ltd (order dated January 9, 2015 in I.A.

No.24863/2014 IN CS(OS) 3812/2014) the Court held:

It is not essential that the patent must be worked by manufacturing the

patented product in India.

The Act (Patent Act) did not mandate that no patent protection would
be granted to a patentee unless the local manufacture is undertaken.

Non-working of a patent could not be taken as a defense to a suit of

infringement in a Civil Court.

The appropriate forum for taking up the issue of non-working of a

patent would be to seek compulsory license before the relevant
authority.

CASE LAW ANALYSIS

BAYER CORPORATION v. UNION OF INDIA, CONTROLLER OF PATENTS
AND NATCO PHARMA (OA/35/2012/PT/MUM)
FACTS:
M/s. Bayer Corporation (Bayer), invented a drug called 'Sorafenib' (Carboxy
Subsituted Diphenyl Ureas) useful in the treatment of advanced stage liver
and kidney cancer in the 1990s. The first patent was applied in the USPTO in
1999 and subsequently a PCT international application was filed in 2000.
Patentee entered the national phase in India in 2001 and was granted a
patent in 2008 in India. The Drug was launched in 2005 under the trade
name Nexavar.
M/s. Natco Pharma Ltd. (Natco) developed a process to manufacture this
drug and a license from drug controller general of India for manufacturing
the drug in bulk and for marketing it in form of tablets in April 2011.
The drug is not a life-saving but a life extending drug. In the case of kidney
cancer, the life of a patient can be extended by 4-5 years, while in the case
of liver cancer the life of a patient can be extended by about 6-8 months.
The drug has to be taken by the patient throughout his lifetimes and the cost
of the therapy is Rs. 2,80,428/- per month and Rs.33,65,136/- per year.
Natco filed an application for compulsory license in July 2011 under Section
84(1) of the Patents Act and Rule 96 of the Patent Rules. Previously Natco
had approached Bayer for a voluntary license which had been refused. Natco
proposed to sell the drug at a price of Rs.8800/- for one month therapy as
compared to the price of about Rs.2,80,428/- charged by Bayer.
Case before the Controller General of Patents

Natco by a letter dated 6th December 2010 had requested for a voluntary
license to manufacture the patented drug and this was turned down by
Bayer.
According to Natco, the demand in the market for Sorafenib was not met by
Bayer as the demand for the drug far exceeded the supply. Drug was
available only in limited quantities in certain Indian cities only. The patented
drug was exorbitantly priced and this was of special concern as it was a lifesaving drug. The market for the export of the drug Sorafenib to developing
and under-developing countries was not supplied and not being developed.
Further, Bayer had failed to work the patent in India within the specified
three- year period, as the patented drug Sorafenib was being imported to
India and not manufactured.
Bayer argued that the demand for the drug was being met. Secondly, a
reasonably affordable price should be calculated with reference to the
public as well as Bayer. According to Bayer there is a class of people who can
afford the drug at its present price, and it cannot be the intention of the
legislature to lower the price of the drug for those who are able to afford it.
Furthermore, the price of patented drugs of this sort has to be sufficient to
support future drug development and research. The current price of the
patented drug was innovation based and therefore more than the generic
pricing of the drug. This was to support the future development of other
drugs by Bayer.
In relation to working the patent in India, Bayer argued that worked means
supplying the drug to the Indian market on a commercial scale, not
necessarily manufacturing the drug in India. The relatively small demand for
Nexavar did not justify manufacture in India. In relation to meeting the
requirements of the public, it acknowledged that it had been providing the
drug to only 2% of the estimated number of patients in India, but maintained
that it was due to the availability of cheaper drugs manufactured by Cipla.

Bayer submitted that the purpose behind Sec 84(1)(a) is to enhance access
to patented inventions. However, access to patented invention is not
identical to affordability and cannot be considered to be on the same footing.
Hence, there exists no case for the grant of compulsory license to the Natco.
The Controller concluded that the demand for the patented drug was not
being met by Bayer. The argument of Bayer that its sales along with that of
Cipla satisfied the reasonable requirements of the public was rejected by the
Controller, as the application for the compulsory license was filed against
Bayer and it was their conduct which was relevant in the present case.
Further, Bayer had tried to prevent Cipla by preferring an infringement suit
against them. This shows that Bayer is adopting two-facedness by taking one
stand before this tribunal and another stance before the Delhi High court
before which the case of infringement is pending.
Section 84 of the Indian Patent Act was analyzed with respect to the present
case and the Controller stated that the patent Act provides that the patent
should be available to the "public" at a "reasonably affordable" price.
Balance needs to be created between the cost of R&D and manufacture on
one hand and reasonably affordable price on the other. It was concluded that
the price of the patented drug was unaffordable to a large section of the
Indian population and as the drug was an essential life enhancing drug.
The Controller held that the provision of working has to be considered in the
context of the principles laid down under Sec 83 [(a) and (b)] of the Patents
Act. Accordingly, it was held that "minimal working is no working at all and
the invention must be worked to the fullest extent to escape from the rigours
of Sec 84(1)(c)". He rejected Bayer's argument that "working of the
invention" as mentioned under Sec 84(1)(c) means working on a commercial
scale only. Mere importation of patents cannot amount to working of
patented invention under Sec 83(b).

Reasonable requirements of public as mentioned under section 84(1)(c) is a

separate ground for compulsory license which was not being met by Bayer.
Hence, the Controller granted a compulsory license in favour of Natco.
In granting the compulsory license to Natco, the Controller took account of
the fact that Bayer had priced Nexavar at Rs. 2.85 lakhs (approx. US$ 5800)
for a one months course, whereas Natco planned to sell its generic version,
for just Rs. 8,800 (US$181). It also took account of the fact that Natco had
undertaken to maintain its price, not to manufacture for export, and to
supply the drug free of charge to 600 deserving and needy patients each
year. Bayers admission that only 2% of kidney and liver cancer patients
were able to access the drug and that the drug was imported and not being
manufactured within India, went against it.
Natco was granted compulsory license for the manufacture of the Drug
Sorafenib subject to the following conditions:
The price of the drug sold by the licensee (Natco) shall not exceed Rs.8800
for a pack of 120 tablets, required for one month's treatment.
1) The licensee shall have the right to manufacture the drug only at its
own manufacturing facility and shall not outsource the production.
2) The license was granted solely for the purpose of making/manufacture,
using, offering to sell and selling the drug covered by the patent for
the purpose of treating HCC and RCC in humans within the territory of
India.
3) The license granted was non exclusive and non assignable.
4) Royalty rate of 6% of the net sales of the drug on a quarterly basis was
fixed.
5) The license was granted for the balance term of the patent.

APPEAL BEFORE THE INTELLECTUAL PROPERTY APPELLATE BOARD

On 14th September 2012, Bayer appealed against the order of the Controller
and to stay the grant of the compulsory license to Natco. One of the main
issues focused by Intellectual Property Appellate Board (IPAB) was the
importance of the role of Cipla's presence in the market as a ground for
revocation of the compulsory license granted by the Controller and the other
was that of public interest.
It was submitted by Bayer that the word work in S.84(1)(c) includes import
and not necessarily local manufacture. According to the Appellant even
import of small quantity and a de minimis proof of working would suffice. It
was further stated that the appellant could not have started working at once,
as they had to get the approval of the authorities, break the market
resistance and win the confidence of the oncologists. For the purpose of the
stay petition the IPAB analyzed Sec.84(7) and Sec. 86(2) and accepted that
the Bayers imports amounted to working.
It was contended by Bayer that the requirements under Sec 84 (1)(b) will not
arise if the drug is made available in the market at reasonably affordable
price and not necessarily by the patentee. It was submitted that the sales of
the Appellant together with the sales of Cipla was satisfying the public
requirement.
In this regard the IPAB held that Bayer had itself conceded that it was
because of Cipla that the public requirement was being met. Then again
Bayer had accused Cipla of preventing it from working the patent in the
Indian market. In the IPAB's opinion these two contentions were inconsistent
with each other and it was held that the decision of the Controller was
correct by not taking Ciplas presence into consideration. It was for the
appellant/patentee to show that it has fulfilled the obligation under the grant
of patent and therefore, its right should be protected.
Another ground that was put forth by Bayer was that Natco did not seriously
ask Bayer for a grant of voluntary license. The Act nowhere states any

particular time period for which negotiations have to go on before a party

can file an application for the grant of a compulsory license. The Act only
states that the Controller shall take into account whether the applicant has
made efforts to obtain a license from the patentee on reasonable terms and
whether the efforts have failed within a reasonable period as the Controller
may deem fit. Hence, it is the discretion of the Controller. This contention
was also rejected by the IPAB.
Section 83(b) shows that patent is not granted to enable the inventor to
enjoy monopoly for importation which means that after importing invention,
the patentee cannot say that it has done what is required on them and rest
with that. The patentee has a duty to make it available to the public at a
price which the public can reasonably afford and in the manner that public
need is satisfied. IPAB observed that Public interest and affordability cannot
be separated. This was rejected by IPAB and it stated that:
"Therefore, when we look at section 84 of the Act, having regard to section
83, as we are directed by that section, it is clear that it is the duty of
patentee to show that the patentee by its own supply has satisfied the
reasonable requirement of the public and by its supply, the drug is made
available at a reasonably affordable price. The appellant cannot ride
piggyback on CIPLAs sale, particularly when the appellant is fighting CIPLA
before another forum regarding the same invention and the same drug."
Finally, the appeal for stay was not granted by the IPAB as Bayer had not
made out a prima facie case for the grant of stay. As regards public interest,
it was concluded that Ciplas presence is subject to litigation and Ciplas
supply cannot be taken note of. The royalty granted by Controller was
changed from 6% to 7% by the IPAB.

CASE BEFORE THE HIGH COURT OF BOMBAY

Bayer filed a writ of certiorari petition under Article 226 of the Constitution in
the Mumbai High Court against the orders of the IPAB dated 9 March 2013
and the Controller dated 4 March 2013 in July 2014.
Reasonable requirement of the Public
The Court held that the conclusion arrived at by the Controller was correct.
With regard to the contention that the infringer's sales of the patented
product should be take into consideration to check whether the reasonable
requirement of the public is being satisfied or not it was held by the Court
that the supplies by infringer (Cipla) cannot be taken into account. This was
because Bayer had filed infringement of patent proceeding against the
infringer and at any time the Court could injunct the infringer from
making/selling the patented drug. Moreover, the obligation to meet the
reasonable requirement of the public is of the patent holder alone either by
itself or through its licensees.
The Court then went on to analyze the term "adequate extent" mention in
Sec. 84(7) of the Act and found that in the context of medicines the
adequate extent has to be 100% i.e. the requirement has to be fully met.
Medicine has to be made available to every patient and this cannot be
deprived/scarified at the altar of rights of patent holder. Thus the reasonable
requirement of the public under Section 84(1)(a) of the Act was not satisfied.
Reasonably Affordable Price
Bayer stated that the reasonable affordable price has to be examined not
only from the perspective of the user of the patented drug but also from the
patent holder's cost of inventing and developing the patented invention.
Further Bayer stated that the test of reasonable price has to be determined
keeping in mind the class of the public to whom the patented drug is made
available. Bayer had introduced the concept of differential pricing under
which the a Patients Assistance Programme (PAP) was started which would

enable poorer patients to obtain the patented drug at cheaper prices. With
regard to this contention of Bayer the Court held that the obligation of the
authorities under the Act is with regard to grant, control and revocation of
patent and not price determination of the patented invention. It further went
on to mention that the reasonably affordable price has to be determined on
the basis of the relative price being offered by the patent holder (Bayer) and
the applicant (Natco) after hearing other interested parties opposing the
application. Therefore, in the present case the price at which Bayer is selling
the patented drug is at about Rs.2,84,000/per month of therapy and Natco
was offering the same at Rs.8,800/per month of therapy. In such a case the
reasonably affordable price has to necessarily be the price offered by Natco.
With regard to the patented drug being available under the PAP programme,
the Court stated that PAP price was a conditional price depending upon the
patient satisfying certain pre-existing criteria and completely at the
discretion of the petitioner and the doctor attending the patient.
Working of the Patent in India:
According to Bayer it had worked the patented drug in the territory of India
by importing the patented drug for the supply to patients in the country. The
fact that the working of the patented drug in India can be done also by
import and not necessarily by manufacture of goods in India is an undisputed
position as it is so held by the Tribunal.
On this issue, the Court examined the provisions laid down under Articles 30
and 31 of TRIPS as well as Secs. 83, 84(7) and 90 of the Act. It concurred
with decision of the IPAB that importation of the patented product can satisfy
the condition of being worked in India and that this needed to be decided on
case by case basis. The Court stated that it is for the patent holder to show
that the patented invention/ drug is worked in the territory of India by
manufacture or otherwise. If the patent holder is able to satisfy the
authorities,

the

reason

why

the

patented

invention

could

not

be

manufactured in India then the patented invention can be considered as

having been worked in the territory in India even by import.
As the patent had been granted to Bayer in 2008 and the application for
grant of compulsory license was filed in 2011, it was sufficient for Bayer to
have worked a patent on a commercial scale but it had led no evidence that
it had tried to work the patent in India on a commercial scale with
promptitude.
With regard to the terms and conditions of the grant of patent the Court
analyzed Article 31 of the TRIPS agreement along with Section 90 of the Act
which inter alia provides that while settling the terms and conditions of the
compulsory license the Controller has to ensure that the royalty and other
remuneration, if any, paid to the patent holder should be such as would
reasonably cover the expenses incurred by the patent holder in making
and/or developing and/or maintaining patented invention.
For the above mentioned reasons the High Court saw no reason to interfere
with the Orders of the IPAB and the Controller and hence, the petition was
dismissed.
APPEAL BEFORE THE SUPREME COURT OF INDIA
(SPECIAL LEAVE TO APPEAL (C) NO(S). 30145/2014)
Bayer applied for a Special Leave Petition to the Supreme Court of India
against the judgment of the Bombay High Court. On December 12, 2014, the
Supreme Court refused to entertain Bayers appeal to set aside the
compulsory license on Sorafenib (Nexavar). The Supreme Courts dismissal
of Bayers Special Leave Petition against the Bombay High Courts decision
upholding of the Compulsory License concluded the legal proceedings on the
first ever Compulsory License issued in India.
It was stated by the Supreme Court that:

In the facts of the present case, we are not inclined to interfere. The Special
Leave Petition is dismissed, keeping all questions of law open.
The license is granted till the remaining term of patent. Hence, the
license is granted till 2021. However, a compulsory license may be
terminated by the Controller on an application made by the
patentee that the circumstances that gave rise to the grant no
longer exist.

ANNEXURE A
Sections
83. General principles applicable to working of patented inventions.
Without prejudice to the other provisions contained in this Act, in
exercising the powers conferred by this Chapter, regard shall be had to the
following

general

considerations,

namely;

(a) that patents are granted to encourage inventions and to secure that the
inventions are worked in India on a commercial scale and to the fullest
extent that is reasonably practicable without undue delay;
(b) that they are not granted merely to enable patentees to enjoy a
monopoly for the importation of the patented article;
(c) that the protection and enforcement of patent rights contribute to the
promotion of technological innovation and to the transfer and dissemination
of technology, to the mutual advantage of producers and users of
technological knowledge and in a manner conducive to social and economic
welfare, and to a balance of rights and obligations;
(d) that patents granted do not impede protection of public health and
nutrition and should act as instrument to promote public interest specially in
sectors

of

vital

importance

for

socio-economic

and

technological

development of India;
(e) that patents granted do not in any way prohibit Central Government in
taking measures to protect public health;
(f) that the patent right is not abused by the patentee or person deriving title
or interest on patent from the patentee, and the patentee or a person
deriving title or interest on patent from the patentee does not resort to
practices which unreasonably restrain trade or adversely affect the
international transfer of technology; and

(g) that patents are granted to make the benefit of the patented invention
available at reasonably affordable prices to the public.
84. Compulsory licenses.(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 license 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.
(2) An application under this section may be made by any person
notwithstanding that he is already the holder of a license under the patent
and no person shall be estopped from alleging that the reasonable
requirements of the public with respect to the patented invention are not
satisfied or that the patented invention is not worked in the territory of India
or that the patented invention is not available to the public at a reasonably
affordable price by reason of any admission made by him, whether in such a
licence or otherwise or by reason of his having accepted such a license.
(3) Every application under sub-section (1) shall contain a statement setting
out the nature of the applicant's interest together with such particulars as
may be prescribed and the facts upon which the application is based.
(4) 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 worked in the territory of India or that the patented
invention is not available to the public at a reasonably affordable price, may
grant a license upon such terms as he may deem fit.

(5) Where the Controller directs the patentee to grant a license he may, as
incidental thereto, exercise the powers set out in section 88.
(6) In considering the application field under this section, the Controller shall
take into account,
(i) the nature of the invention, the time which has elapsed since the sealing
of the patent and the measures already taken by the patentee or any
licensee to make full use of the invention;
(ii) the ability of the applicant to work the invention to the public advantage;
(iii) the capacity of the applicant to undertake the risk in providing capital
and working the invention, if the application were granted;
(iv) as to whether the applicant has made efforts to obtain a licence from the
patentee on reasonable terms and conditions and such efforts have not been
successful within a reasonable period as the Controller may deem fit:
Provided that this clause shall not be applicable in case of national
emergency or other circumstances of extreme urgency or in case of public
non-commercial use or on establishment of a ground of anticompetitive
practices adopted by the patentee, but shall not be required to take into
account matters subsequent to the making of the application.
Explanation.For the purposes of clause (iv), "reasonable period" shall
be construed as a period not ordinarily exceeding a period of six months.
(7) For the purposes of this Chapter, the reasonable requirements of the
public shall be deemed not to have been satisfied
(a) if, by reason of the refusal of the patentee to grant a licence or licences
on reasonable terms,
(i) an existing trade or industry or the development thereof or the
establishment of any new trade or industry in India or the trade or

industry of any person or class of persons trading or manufacturing in

India is prejudiced; or
(ii) the demand for the patented article has not been met to an
adequate extent or on reasonable terms; or
(iii) a market for export of the patented article manufactured in India is
not being supplied or developed; or
(iv) the establishment or development of commercial activities in India
is prejudiced; or
(b) if, by reason of conditions imposed by the patentee upon the grant of
licences under the patent or upon the purchase, hire or use of the patented
article or process, the manufacture, use or sale of materials not protected by
the patent, or the establishment or development of any trade or industry in
India, is prejudiced; or
(c) if the patentee imposes a condition upon the grant of licences under the
patent to provide exclusive grant back, prevention to challenges to the
validity of patent or coercive package licensing; or
(d) if the patented invention is not being worked in the territory of India on a
commercial scale to an adequate extent or is not being so worked to the
fullest extent that is reasonably practicable; or
(e) if the working of the patented invention in the territory of India on a
commercial scale is being prevented or hindered by the importation from
abroad of the patented article by
(i) the patentee or persons claiming under him or
(ii) persons directly or indirectly purchasing from him; or
(iii) other persons against whom the patentee is not taking or has not
taken proceedings for infringement.

85. Revocation of patents by the Controller for non-working.(1)

Where, in respect of a patent, a compulsory licence has been granted, the
Central Government or any person interested may, after the expiration of
two years from the date of the order granting the first compulsory licence,
apply to the Controller for an order revoking the patent on the ground that
the patented invention has not been worked in the territory of India or that
reasonable requirements of the public with respect to the patented invention
has not been satisfied or that the patented invention is not available to the
public at a reasonably affordable price.
(2) Every application under sub-section (1) shall contain such particulars as
may be prescribed, the facts upon which the application is based, and, in the
case of an application other than by the Central Government, shall also set
out the nature of the applicant's interest.
(3) The Controller, if satisfied that the reasonable requirements of the public
with respect to the patented invention have not been satisfied or that
patented invention has not been worked in the territory of India or that the
patented invention is not available to the public at a reasonably affordable
price, may make an order revoking the patent.
(4) Every application under sub-section (1) shall ordinarily be decided within
one year of its being presented to the Controller.
86. Power of Controller to adjourn applications for compulsory
licences, etc., in certain cases.(1) Where an application under section
84 or section 85, as the case may be, is made on the grounds that the
patented invention has not been worked in the territory of India or on the
ground mentioned in clause (d) of sub-section (7) of section 84 and the
Controller is satisfied that the time which has elapsed since the sealing of the
patent has for any reason been insufficient to enable the invention to be
worked on a commercial scale to an adequate extent or to enable the
invention to be so worked to the fullest extent that is reasonably practicable,

he may, by order, adjourn the further hearing of the application for such
period not exceeding twelve months in the aggregate as appears to him to
be sufficient for the invention to be so worked:
Provided that in any case where the patentee establishes that the
reason why a patented invention could not be worked as aforesaid before the
date of the application was due to any State or Central Act or any rule or
regulation made thereunder or any order of the Government imposed
otherwise than by way of a condition for the working of the invention in the
territory of India or for the disposal of the patented articles or of the articles
made by the process or by the use of the patented plant, machinery, or
apparatus, then, the period of adjournment ordered under this sub-section
shall be reckoned from the date on which the period during which the
working of the invention was prevented by such Act, rule or regulation or
order of Government as computed from the date of the application, expires.
(2) No adjournment under sub-section (1) shall be ordered unless the
Controller is satisfied that the patentee has taken with promptitude adequate
or reasonable steps to start the working of the invention in the territory of
India on a commercial scale and to an adequate extent.
87. Procedure for dealing with applications under sections 84 and
85. (1) Where the Controller is satisfied, upon consideration of an
application under section 84, Or section 85, that a prima facie case has been
made out for the making of an order, he shall direct the applicant to serve
copies of the application upon the patentee and any other person appearing
from the register to be interested in the patent in respect of which the
application is made, and shall publish the application in the official journal.
(2) The patentee or any other person desiring to oppose the application may,
within such time as may be prescribed or within such further time as the
Controller may on application (made either before or after the expiration of
the prescribed time) allow, give to the Controller notice of opposition.

(3) Any such notice of opposition shall contain a statement setting out the
grounds on which the application is opposed.
(4) Where any such notice of opposition is duly given, the Controller shall
notify the applicant, and shall give to the applicant and the opponent an
opportunity to be heard before deciding the case,
88. Powers of Controller in granting compulsory licences.(1) Where
the Controller is satisfied on an application made under section 84 that the
manufacture, use or sale of materials not protected by the patent is
prejudiced by reason of conditions imposed by the patentee upon the grant
of licences under the patent, or upon the purchase, hire or use of the
patented article or process, he may, subject to the provisions of that section,
order the grant of licences under the patent to such customers of the
applicant as he thinks fit as well as to the applicant.
(2) Where an application under section 84 is made by a person being the
holder of a licence under the patent, the Controller may, if he makes an
order for the grant of a licence to the applicant, order the existing licence to
be cancelled, or may, if he thinks fit, instead of making an order for the grant
of a licence to the applicant, order the existing licence to be amended.
(3) Where two or more patents are held by the same patentee and an
applicant

for

compulsory

licence

establishes

that

the

reasonable

requirements of the public have not been satisfied with respect to some only
of the said patents, then, if the Controller is satisfied that the applicant
cannot efficiently or satisfactorily work the licence granted to him under
those patents without infringing the other patents held by the patentee and
if those patents involve important technical advancement of considerable
economic significance in relation to the other patents, he may, by order,
direct the grant of a licence in respect of the other patents also to enable the
licensee to work the patent or patents in regard to which a licence is granted
under section 84.

(4) Where the terms and conditions of a licence have been settled by the
Controller, the licensee may, at any time after he has worked the invention
on a commercial scale for a period of not less than twelve months, make an
application to the Controller for the revision of the terms and conditions on
the ground that the terms and conditions settled have proved to be more
onerous than originally expected and that in consequence thereof the
licensee is unable to work the invention except at a loss:
Provided that no such application shall be entertained a second time.
89. General purposes for granting compulsory licences.The powers
of the Controller upon an application made under section 84 shall be
exercised with a view to securing the following general purposes, that is to
say,
(a) that patented inventions are worked on a commercial scale in the
territory of India without undue delay and to the fullest extent that is
reasonably practicable;
(b) that the interests of any person for the time being working or developing
an invention in the territory of India under the protection of a patent are not
unfairly prejudiced.
90. Terms and conditions of compulsory licences.(1) In settling the
terms and conditions of a licence under section 84, the Controller shall
endeavour to secure
(i) that the royalty and other remuneration, if any, reserved to the patentee
or other person beneficially entitled to the patent, is reasonable, having
regard to the nature of the invention, the expenditure incurred by the
patentee in making the invention or in developing it and obtaining a patent
and keeping it in force and other relevant factors;

(ii) that the patented invention is worked to the fullest extent by the person
to whom the licence is granted and with reasonable profit to him;
(iii) that the patented articles are made available to the public at reasonably
affordable prices;
(iv) that the licence granted is a non-exclusive licence;
(v) that the right of the licensee is non-assignable;
(vi) that the licence is for the balance term of the patent unless a shorter
term is consistent with public interest;
(vii) that the licence is granted with a predominant purpose of supply in the
Indian market and that the licensee may also export the patented product if
need be in accordance with the provisions of sub-clause (iii) of clause (a) of
sub-section (7) of section 84;
(viii) that in the case of semi-conductor technology, the licence granted is to
work the invention for public non-commercial use;
(ix) that in case the license is granted to remedy a practice determined after
judicial or administrative process to be anti-competitive, the licensee shall be
permitted to export the patented product, if need be.
(2) No license granted by the Controller shall authorize the licensee to import
the patented article or an article or substance made by a patented process
from abroad where such importation would, but for such authorization,
constitute an infringement of the rights of the patentee.
(3) Notwithstanding anything contained in sub-section (2), the Central
Government may, if in its opinion it is necessary so to do, in the public
interest, direct the Controller at any time to authorise any licensee in respect
of a patent to import the patented article or an article or substance made by
a patented process from abroad (subject to such conditions as it considers

necessary to impose relating among other matters to the royalty and other
remuneration, if any, payable to the patentee, the quantum of import, the
sale price of the imported article and the period of importation), and
thereupon the Controller shall give effect to the directions.
91.

Licensing

of

related

patents.(1)

Notwithstanding

anything

contained in the other provisions of this Chapter, at any time after the
sealing of a patent, any person who has the right to work any other patented
invention either as patentee or as licensee thereof, exclusive or otherwise,
may apply to the Controller for the grant of a license of the first mentioned
patent on the ground that he is prevented or hindered without such license
from working the other invention efficiently or to the best advantage
possible.
(2) No order under sub-section (1) shall be made unless the Controller is
satisfied
(i) that the applicant is able and willing to grant, or procure the grant
to the patentee and his licensees if they so desire, of a licence in
respect of the other invention on reasonable terms; and
(ii) that the other invention has made a substantial contribution to the
establishment or development of commercial or industrial activities in
the territory of India.
(3) When the Controller is satisfied that the conditions mentioned in subsection (1) have been established by the applicant, he may make an order on
such terms as he thinks fit granting a licence under the first mentioned
patent and a similar order under the other patent if so requested by the
proprietor of the first mentioned patent or his licensee:
Provided that the licence granted by the Controller shall be nonassignable except with the assignment of the respective patents. (4) The

provisions of sections 87, 88, 89 and 90 shall apply to licences granted under
this section as they apply to licences granted under section 84.
92. Special provision for compulsory licences on notifications by
Central Government.(1) If the Central Government is satisfied, in respect
of any patent in force in circumstances of national emergency or in
ircumstances of extreme urgency or in case of public noncommercial use,
that it is necessary that compulsory licenses should be granted at any time
after the sealing thereof to work the invention, it may make a declaration to
that effect, by notification in the Official Gazette, and thereupon the
following provisions shall have effect, that is to say
(i) the Controller shall on application made at any time after the notification
by any person interested, grant to the applicant a licence under the patent
on such terms and conditions as he thinks fit;
(ii) in settling the terms and conditions of a licence granted under this
section,

the

Controller

shall

endeavour

to

secure

that

the

articles

manufactured under the patent shall be available to the public at the lowest
prices consistent with the patentees deriving a reasonable advantage from
their patent rights.
(2) The provisions of sections 83, 87, 88, 89 and 90 shall apply in relation to
the grant of licences under this section as they apply in relation to the grant
of licences under section 84.
(3) Notwithstanding anything contained in sub-section (2), where the
Controller is satisfied on consideration of the application referred to in clause
(i) of sub-section (1) that it is necessary in
(i) a circumstance of national emergency; or
(ii) a circumstance of extreme urgency; or
(iii) a case of public non-commercial use,

which may arise or is required, as the case may be, including public health
crises, relating to Acquired Immuno Deficiency Syndrome, Human Immuno
Deficiency Virus, tuberculosis, malaria or other epidemics, he shall not apply
any procedure specified in section 87 in relation to that application for grant
of licence under this section:
Provided that the Controller shall, as soon as may be practicable, inform the
patentee of the patent relating to the application for such non-application of
section 87.
92A. Compulsory licence for export of patented pharmaceutical
products in certain exceptional
licence shall be available
pharmaceutical

products

to

circumstances.(1) Compulsory

for manufacture and export of patented

any

country

having

insufficient

or

no

manufacturing capacity in the pharmaceutical sector for the concerned

product to address public health problems, provided compulsory licence has
been granted by such country or such country has, by notification or
otherwise, allowed importation of the patented pharmaceutical products
from India.
(2) The Controller shall, on receipt of an application in the prescribed
manner, grant a compulsory licence solely for manufacture and export of the
concerned pharmaceutical product to such country under such terms and
conditions as may be specified and published by him.
(3) The provisions of sub-sections (1) and (2) shall be without prejudice to
the extent to which pharmaceutical products produced under a compulsory
license can be exported under any other provision of this Act.
Explanation.For the purposes of this section, 'pharmaceutical products'
means any patented product, or product manufactured through a patented
process, of the pharmaceutical sector needed to address public health

problems

and

shall

be

inclusive

of

ingredients

manufacture and diagnostic kits required for their use.]

necessary

for

their

THE PATENTS RULES, 2003

96. Application for compulsory licence etc.An application to the
Controller for an order under section 84, section 85, section 91 or section 92
or section 92A shall be in Form 17, or Form 19, as the case may be. Except in
the case of an application made by the Central Government, the application
shall set out the nature of the applicant's interest and terms and conditions
of the licence the applicant is willing to accept.
97. When a prima facie case is not made out.(1) If, upon
consideration of the evidence, the Controller is satisfied that a prima facie
case has not been made out for the making of an order under any of the
sections referred to in rule 96, he shall notify the applicant accordingly, and
unless the applicant requests to be heard in the matter, within one month
from the date of such notification, the Controller shall refuse the application.
(2) If the applicant requests for a hearing within the time allowed under subrule (1), the Controller shall, after giving the applicant an opportunity of
being heard, determine whether the application may be proceeded with or
whether it shall be refused.
98. Notice of opposition under section 87(2).(1) A notice of
opposition under sub-section (2) of section 87 shall be given in Form 14 and
shall be sent to the Controller within two months from the date of the
publication of the application under sub-section (1) of the said section.
(2) The notice of opposition referred to in sub-rule (1) shall include the terms
and conditions of the licence, if any, the opponent is prepared to grant to the
applicant and shall be accompanied by evidence in support of the opposition.
(3) The opponent shall serve a copy of his notice of opposition and evidence
on the applicant and notify the Controller when such service has been
effected.

(4) No further statement or evidence shall be delivered by either party

except with the leave of or on requisition by the Controller.
(5) The Controller shall forthwith fix a date and time for the hearing of the
case and shall give the parties not less than ten days' notice of such hearing.
(6) The procedure specified in sub-rules (2) to (5) of rule 62, shall, so far as
may be, apply to the procedure for hearing under this rule as they apply to
the hearing in opposition proceedings.
99. Manner of publication of the revocation order.The Controller
shall publish the order made by him under sub-section (3) of section 85
revoking a patent.
100. Application under section 88(4).(1) An application under subsection (4) of section 88 for the revision of the terms and conditions of a
license which have been settled by the Controller shall be in Form 20 and
shall state the facts relied upon by the applicant and the relief he seeks and
shall be accompanied by evidence in support of the application.
(2) If the Controller is satisfied that a prima facie case has not been made
out for the revision of the terms and conditions of the license, he may notify
the applicant accordingly and unless within a month the applicant requests
to be heard in the matter, the Controller may refuse the application.
(3) The Controller, after giving the applicant an opportunity of being heard,
shall determine whether the application shall be proceeded with or whether
the application shall be refused.
101. Procedure to be followed in case of applications under section
88(4).(1) If the Controller allows the application to be proceeded with, he
shall direct the applicant to serve copies of the application and of the
evidence in support thereof upon the patentee or any other person

appearing in the register to be interested in the patent or upon any other

person on whom, in his opinion such copies should be so served.
(2) The applicant shall inform the Controller the date on which the service of
copies of application and of the evidence on the patentee and other persons
referred to in sub-rule (1) has been effected.
(3) The patentee or any other person on whom copies of the application and
of the evidence have been served, may give to the Controller notice of
opposition in Form 14 within one month from the date of such service. Such
notice shall contain the grounds relied upon by the opponent and shall be
accompanied by evidence in support of the opposition.
(4) The opponent shall serve copies of the notice of opposition and his
evidence on the applicant and inform the Controller the date on which such
service has been effected.
(5) No further evidence or statement shall be filed by either party except
with special leave of or on requisition by the Controller.
(6) On completion of the above proceedings, the Controller shall forthwith fix
a date and the time for the hearing of the case and shall give the parties not
less than ten days' notice of such hearing.
(7) The procedure specified in sub-rules (2) to (5) of rule 62 shall, so far as
may be, apply to the procedure for hearing under this rule as they apply to
the hearing in opposition proceedings.
(8) If the Controller decides to revise the terms and conditions of license he
shall forthwith amend the licence granted to the applicant in such manner,
as he may deem necessary.
102. Application for termination of compulsory license under section
94.(1) An application for termination of compulsory licence under section
94(1) shall be made in Form 21 by the patentee or any other person deriving

title or interest in the patent. The application shall be accompanied by the

evidence in support of the application.
(2) The applicant shall serve a copy of the application and evidence on the
holder of the compulsory licence and shall inform the Controller the date on
which the service has been effected.
(3) The holder of the compulsory license may file his objection along with
evidence, if any, to the application within one month from the date of receipt
of the application and evidence by him to the Controller and serve a copy
thereof to the applicant.
(4) No further evidence or statement shall be filed by either party except
with special leave of or on requisition by the Controller.
(5) On completion of the above proceedings, the Controller shall forthwith fix
a date and the time for the hearing of the case and shall give the parties not
less than ten days notice of such hearing.
(6) The procedure specified in sub-rules (2) to (5) of rule 62 so far as may be,
apply to the procedure for hearing under this rule as they apply to the
hearing in opposition proceedings.
(7) If the Controller decides to terminate the compulsory license he shall
forthwith issue an order giving terms and conditions, if any, of such
termination and serve copies of the order to both the parties.