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The Indian Patent Law regime is governed by the Patents Act, 1970 which had replaced the pre-independence patent law. Since patents are not conferred with common-law protections as in the case of Trademarks i.e. passing off of the marks of another prior user; therefore the rights and privileges on an invention and to the inventor flow only from the legislation. The Patents Act, 1970 in effect codifies the law in respect of registration, management, revocation and expiration of the patent.

Grant of patent on an invention confers a monopoly to the inventor/owner to exploit the patent for its gain, albeit for a limited time frame i.e. 20 years(date of filing/PCT filing). The idea of granting limited monopolistic protection was to assure innovators that the efforts(and investment) for inventing would be duly compensated and also by ensuring that inventions are brought out and be open to public at large. In turn the community would benefit from the innovation which otherwise would have not come in public domain since the inventor would have been fearful of exploitation of its innovation without any recourse. The law was formulated to ensure that the innovator had the fruits of its innovation.

Working of Patents

The law while recognizing the need to grant protection to the inventions by innovators also anticipated that merely granting recognition and protection to innovations would not be sufficient to ensure that the fruits of the innovation is sufficiently accessible by the public. Like every other owner of a property, the rights of a patentee includes the right to work the patent, licence and assign etc in order to ensure that the objectives of the statuary protection are fulfilled in letter and spirit.

The need for providing such safeguards was addressed by introducing provisions of Chapter XVI i.e. “Working of Patents, Compulsory Licences and Revocation” in the Patents Act, 1970.

Section 83 of the Patents Act, 1970 delineated the general expectations from the holder of patent rights to exploit the patent. The provision in no less express terms mandates that the holder of the patent is required to fully commercially exploit the patent and not to enjoy a monopoly. Interestingly Section 83(g) mandated that the patent was granted to ensure that the patented invention was available to be public at reasonably affordable prices.

Section 83 reads as:

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.

While Section 83 of the Patents Act, 1970 stipulates conditions on the patentee to exploit the patent, to see through that the objective is achieved, the law provides for a transparent system of checks and balances by stipulating that every holder of a patent has to provide an annual statement detailing the “extent to which the patented invention has been worked on a commercial scale in India.” under Section 146(2).

The provision of filing an annual statement, permits the public at large and especially interested parties to ascertain that the patented inventions have been worked as stipulated in the law. Being a public office, the filing becomes part of public record and can be accessed to ascertain the extent of working of the patented invention.

This aspect of regular reporting of the working of the patent is a precursor to any proceedings under Chapter XVI, this is premised on the logic that the Patentee has the complete details of the actual working of the patented invention and the data by the patentee can be laid as a foundation to test whether the conditions as stipulated under Section 83 has been fulfilled.

Compulsory Licence

Section 84 of the Patent Act, 1970 stipulates the conditions for grant of compulsory licence. Some of the salient features of the provision are:

A.The application for Compulsory licence can only be applied after completion of three years of grant of licence.

B.The application can be filed on the following grounds:

(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.The controller of the patents has to consider the following factors for grant of compulsory licence:

(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:

D.The conditions as to reasonable requirements of the public shall be deemed not to have been satisfied if:

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

a.a market for export of the patented article manufactured in India is not being supplied or developed; or

b.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.

The conditions as stipulated in Section 83 is further elaborated by this provision and lays down a clear and unambiguous test which the controller is required to apply. The principles as enunciated in Section 84 are required to be applied in the facts of each application for grant of compulsory licence which not only mandates to consider the working of the patented invention but also obligates the Controller to consider the capacity of the Applicant to effectively work the patented invention and also tests the bona fide of the applicant as it stipulates that the applicant is required to make effort to obtain a voluntary licence from the patentee.

Revocation of Patents

Chapter XII deals with Surrender and Revocation of patents which is distinct from revocation in this chapter as proceedings for revocation int his chapter assumes the patentability of the invention and is applicable only to a valid and subsisting patent(with other conditions as discussed herein after).

The powers of revocation under this chapter is based on the following conditions:

A.The application for revocation can be filed after completion of 2 years from the date of grant of Compulsory licence; and

B.The patented invention has not been worked in the territory of India; or

C.reasonable requirements of the public with respect to the patented invention has not been satisfied; or

D.or that the patented invention is not available to the public at a reasonably affordable price.

The chapter further in sections 86-90 and 92-93 provide for procedure and powers of the controller in proceedings related to compulsory licence and revocation.

Compulsory licences by Central Government:

Section 92 of the Patents Act, 1970 provides for a distinct and limited power to the Central Government to grant compulsory licence any time after the grant of patent, if:

(i)in circumstances of national emergency or

(ii)in circumstances of extreme urgency or

(iii)in case of public non-commercial use

The Central Government may issue a notification under this provision which will empower the controller to issue compulsory licences after following the proceedings as stipulated in the chapter. However in case of public health crises, relating to Acquired Immuno Deficiency Syndrome, Human Immuno Deficiency Virus, tuberculosis, malaria or other epidemics, the controller is empowered to issue licences without following the procedure under Section 87.

This aspect becomes relevant when we consider the current public health crisis and the rapid spread of COVID-19, the Central Government and the controller are not bound by the fetters of procedure and can summarily issue compulsory licence as and when situation demands for issuance of such licence.

Before concluding, I would like to discuss the first case of grant of compulsory licence in India. The brief facts of the case which led to grant of licence as recorded in order of IPAB in Bayer Corporation vs. Union of India & Ors in OA/35/2012/PT/MUM and subsequently by the Bombay High Court in Writ Petition No. 1323 of 2013 are:

(i)Bayer Corporation, the holder of patent of drug named “Sorafenib Tosylate” having brand name Nexavar. The drug was stated to be a palliative drug for patients suffering from Renal Cell carcinoma and Hepato-Cellular Carcinoma.

(ii)Natco Pharma limited filed an application for grant of Compulsory Licence on the grounds that i) it could not obtain voluntary licence despite efforts ii) the Applicant could offer the drug at a price of less than Rs.10,000/- per month of therapy as against the price of Rs.2,80,428/- per month by Bayer Corporation iii) Natco stated that Bayer had not with regard to the patented drug met the reasonable requirement of public nor was it reasonably priced nor was it worked in the territory of India.

While both Natco and Bayer raised multifarious pleas before the Controller, IPAB and High Court, I would like to focus on some of the aspects which in my opinion are the tests as laid out in chapter.

I.Efforts to obtain Voluntary Licence:

The Applicant of CL, Natco relied upon its communication with Bayer to establish its claim that the Natco had made enough efforts to obtain Voluntary Licence. To the contrary Bayer contended that the letter by Natco was merely notice or threat and not any effort to obtain voluntary licence. The IPAB considered the contents of the letter and held that Bayer did not convey that there was room for negotiation which would have established foundation for effort to negotiate the terms for voluntary licence.

The Bombay High Court (“High Court”) also examined the records of the communications between the parties, the Court observed and concluded:

“We have examined the correspondence between the Natco and the petitioner. It is on the basis of examination of evidence i.e. exchange of letters between the parties in the context of Section 84(6) of the Act that both the authorities concluded that effort was made by Natco to obtain for voluntary licence. This concurrent finding of fact was based on appreciation of evidence before the authorities. We also find that the petitioner's response dated 27 December 2010 to Natco's request for a Voluntary licence very clearly records its refusal to grant voluntary licence to the applicant. The so called window in the petitioner's response for Natco to approach is illusory as it is open only if the Natco had anything to add to the application already made.

Therefore, we find no reason to interfere with the findings of the authorities under the Act. We hold that the second condition precedent for consideration of application for compulsory licence namely an effort to obtain a voluntary licence has been satisfied by Natco. Therefore the consideration of the application by Natco for grant of Compulsory Licence to the Controller cannot be faulted nor the impugned order can be faulted on the above ground.”

II.Reasonable requirement of the public is not satisfied:

The first of the three test as stipulated in this chapter, the IPAB and High Court examined whether the requirement of the public is being satisfied or not.

The IPAB examined the sale records as derived from the records filed with Form 27 and concluded that the date of working of the Patentee and its Licencee can only be utilised to ascertain that the reasonable requirement of the public is being satisfied. There is another aspect which was examined and rejected by IPAB was the infringement by Cipla which Bayer had relied upon to claim that the patent was being worked upon to take care of requirement of the public.

This submission was also rejected by the High Court on the ground that the requirement of the public cannot be ascertained on the basis of any mathematical basis. The Court observed that the controller and the IPAB has considered the claims of the rival parties and had concluded on the basis of the material on record. The High Court also noted that there were approximately 8842 patients and the drugs were supplied only to 200 patients. The High Court held that the reasonable requirement would not be satisfied even of the numbers provided by the infringer i.e. Cipla is taken into consideration.

III.Non-availability at a reasonably affordable price:

The second test with respect to reasonably affordable price, the IPAB considered two fold submission 1. Bayer was providing drugs under Patient assistance program and Health insurance schemes and that the drugs were available for Rs. 2,80,000/- per month.

The IPAB held that the patient assistance programme would not be considered for ascertaining the access to the drugs by the patients. It further held that reduction of prices by the patentee would not frustrate the application for grant of compulsory licence.

IV.Patented invention is not worked in territory of India:

On the question of working, while both the IPAB and High Court referred and relied on the submissions of Natco that working in India would not only mean manufacturing in India and import of patented invention can also be considered working for the purposes of Patent Act, 1970. The courts kept this aspect open on the ground as the claims made in every case would vary from facts of such claim. It however laid down that working in India would mean working in Commercial Scale and not token working of the patented drug.

In an appeal against the order of the Bombay High Court, the Supreme Court had refused to grant leave.

While online search would reveal that there are other cases where the applications are either pending adjudication or have been withdrawn. In my opinion, the compulsory licence regime is at a nascent stage and would evolve with time. While every matter would turn on its facts, laying down a general body of case law would permit the Adjudicatory forums/Courts, industry, consumers and practitioners of Patent Law would have the benefit of such case law to formulate a guiding light to deal with every application and would permit the patentee to ensure that its intellectual property are worked and managed in accordance with Indian Laws.

Views are personal.

Indian Patent Law-Analysis of Working, Revocation and Compulsory Licence regime.

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