"Analysing Compulsory Licensing within India's Intellectual Property Rights

(IPR) Framework"

A Dissertation
Submitted to
Shoolini University
In partial fulfillment of the degree of
Master of Laws (LL.M)

Supervisor: Submitted by:

Mrs. Richika Aditya Mani Sharma
Assistant Professor LLM (CORPORATE LAW)
Faculty of Legal Science Enrollment Number-
Shoolini University PGD202346368

FACULTY OF LEGAL SCIENCE

SHOOLNI UNIVERSITY OF BIOTECHNOLOGY AND MANAGEMENT
SCIENCE
SOLAN,H.P
 CERTIFICATE

This is to certify that the Dissertation entitled "Analysing Compulsory Licensing

within India's Intellectual Property Rights (IPR) Framework" submitted in
partial fulfillment for the award of the degree of Master of Law to Faculty of Legal
Sciences Shoolini University of Biotechnology and Management Sciences, Solan
(H.P.) is an original research work carried out by Aditya Mani Sharma
(Registration No.PGD202346368) under my guidance supervision. No part of this
Dissertation has been submitted for any other degree or diploma to this or any other
university. The assistance and help received during the course of the investigation
have been duly acknowledged.

(Name and Signature of Research Guide)

Mrs. Richika
Assistant Professor
Faculty of Legal Sciences
Shoolini University

Place: Solan , Himachal Pradesh

Date:

i
 DECLARATION BY THE CANDIDATE

I hereby declare that the dissertation entitled “Analysing Compulsory Licensing

within India's Intellectual Property Rights (IPR) Framework" submitted in
partial fulfillment for P.G. course for the award of the degree of Master of Laws to
Faculty of Legal Sciences, Shoolini University of Biotechnology and Management
Sciences, Solan (H.P.) This is an original research work carried out under the
guidance and supervision of Mrs. Richika Assistant Professor.

(Name and Signature of Candidate)

Aditya Mani Sharma
LLM (Corporate law)
Enrollment Number- PGD202346368
Shoolini University

Place: Solan, Himachal Pradesh

Date:

ii
 ACKNOWLEDGEMENT

I am immensely grateful and humbled as I present this dissertation titled “Analysing

Compulsory Licensing within India's Intellectual Property Rights (IPR) Framework".
This research Endeavour would not have been possible without the invaluable
support, guidance, and encouragement from the following individuals.

First and foremost, I would like to thank my supervisor, Mrs. Richika, Assistant
Professor, School of Legal Sciences, Shoolini University for providing me an
opportunity to work on her dissertation under his guidance. She has provided valuable
guidance, time, and sources during different phases of this dissertation. She provides
deep motivation and constructive feedback in shaping the direction and focus of this
dissertation.

I am also grateful to my friends and colleagues for their encouragement, support, and
stimulating discussions.

Finally, this dissertation would not have been possible without the confidence,
endurance, and support of my family. My family has always been a source of
inspiration and encouragement. Their unwavering belief in my abilities and endless
encouragement has been my source of strength, pushing me to overcome challenges
and pursue excellence.

Above all, thank you Almighty God, for being in guiding light and source of
inspiration throughout this journey.

Aditya Mani Sharma

iii
LIST OF ABBREVIATIONS

ACTA : Anti Counterfeiting Trade Agreements

Art./ Arts. : Article/ Articles
CGPDTM : Controller General Patents, Designs and Trademarks
CL : Compulsory Licence
e.g. : example gratia (For example)
Ed. : Edition/Editor
et al : and others
etc. : et cetra
FDI : Foreign Direct Investment
FTA : Free Trade Agreements
GATT : General Agreement on Tariffs and Trade
HIV : Human Immunodeficiency Virus
i.e. : id est (“that is”)
IPR : Intellectual Property Right
JIPR : Journal of Intellectual Property Rights
JPO : Japan Patent Office
M/s : Messers
MNCs : Multi National Corporations
NME : New Molecular Entity
No. : Number
p./pp. : Page(s)
Para. : Paragraph
PPVFR : Protection of Plant Varieties and Farmer Rights
R&D : Research and Development
SC : Supreme Court
TRIPS : Trade-Related Aspects of Intellectual Property Rights
UNDP : United Nations Development Programme
v./vs. : Versus
VIPs : Visually Impaired Persons
WCT : WIPO Copyright Treaty
WIPO : World Intellectual Property Organisation
WPT : WIPO Performances and Phonograms Treaty

iv
LIST OF CASES

• Ashdown v. Telegraph Group Ltd., [2001] 4 All ER 666

• Bayer Corporation v. Union of India & Others, OA/32/2012/PT/MUM
• Bayer Corporation v. Union of India, 2014 (60) PTC 277 (Bom)
• Blackwood and Sons Ltd. v. A.N. Parasuraman, AIR 1959 Mad 410 para.85
• Super Cassettes Industry Ltd. v. Hamar Television Network Private Ltd.,
2011(45) PTC 70 (Del) at 88-89
• Entertainment Network (India) Ltd. v. Super Cassette Industries Ltd.,
2008(37) PTC 353(SC)
• Hubbard v. Vosper, [1972] 2 Q.B. 84
• In Re: Distribution of Essential Supplies and Services During Pandemic, In
The Supreme Court Of India Civil Original Jurisdiction Suo Motu Writ
Petition (Civil) No. 3 of 2021
• Lee Pharma Ltd. v. AstraZeneca AB, C.L.A. No.1 of 2015
• M/s BDR Pharmaceuticals International Pvt Ltd versus M/s Bristol Myers
• Squibb Company (C.L.A. No. 1 of 2013)
• M/S. Entertainment Network (India) Ltd. v. M/S. Super Cassettes Industries
Ltd., Supreme Court of India, Civil Appeal No. 5114 of 2005
• Natco v. Bayer, CLA No. 1 of 2011
• Neo-Pharma Industries v. Park Davis and Co.
• Novartis AG v. Union of India & Others, Civil Appeal Nos. 2706-2716 of
2013 Para 157
• Phonographic Performance Ltd. v. Music Broadcast Pvt. Ltd.,
2004(29)PTC282 (Bom)
• State of Rajasthan v. Union of India, 1978 SCR (1)1
• Twentieth Century Music Corp. v. Aiken, 422 U.S. 151, 156 (1975)

v
 CONTENTS

CHAPTERS TITLE PAGE

NO
Certificate i
Declaration by the Candidate ii
Acknowledgment iii
List of Abbreviations iv
List of Cases v
Contents vi
I INTRODUCTION 1-19
1.1 Background 1
1.2 Introduction to Intellectual Property Rights 9
1.2.1 Types of intellectual Property Rights 9
1.3 Literary Review 12
1.4 Scope of The Study 15
1.5 Hypothesis 15
1.6 Objective 15
1.7 Research Methodology 16
1.8 Chapter Scheme 17
II THE EVOLUTION AND GLOBAL PERSPECTIVE 20-40
OF COMPULSORY LICENSING
2.1 Introduction 20
2.2 Origin Of compulsory Licensing 21
2.2.1 Patents 21
2.2.2 Copyright 22
2.3 License: Definition and Concept 23
2.3.1 Licensing of Intellectual Property 24
2.3.2 Kinds of License 25
2.3.3 Difference Between License and 26
Assignment
2.4 Meaning and Concept of Compulsory Licensing 27
2.4.1 Non-Compulsory License, Statutory 29
License, Non- Voluntary License
2.5 Philosophy of Compulsory Licensing 30

vi
 2.6 International Perspective on Compulsory Licensing 32
2.6.1 Paris Convention 33
2.6.2 Berne Convention 33
2.6.3 The Universal Copyright Convention 34
2.6.4 Rome Convention 34
2.6.5 TRIPS Agreement 35
2.6.6 Doha Declaration 36
2.6.7 The Marrakesh Treaty 37
2.6.8 Free Trade Agreement 38
2.6.9 The Anti-Counterfeiting Trade 39
Agreement
2.7 Conclusion 40
III COMPULSORY LICENSING UNDER INDIAN 41-59
LAWS
3.1 Introduction 41
3.2 Integrating the flexibilities outlined in the TRIPS 42
agreement into the Patents Act of 1970.
3.2.1 Exceptions From grant of Patents 42
3.2.2 Exceptions to rights granted by 43
product patents
3.2.3 Limited Data Protection 43
3.3 Grounds for Compulsory Licensing 44
3.3.1 Abuse of Patents Rights 44
3.3.2 Licenses of Related Patents 48
3.3.3 Public Interest 51
3.4 Compulsory licensing Under Copyright Act, 1957 55
3.5 Compulsory licenses under The Protection of Plant 57
Varieties and Farmers' Rights Act, 2001
3.6 Conclusion 59
IV Analysing Compulsory Licensing Cases in India: A 60-77
Judicial Context
4.1 Introduction 60
4.2 Nacto vs Bayer 60

vii
 4.3 Lee Pharma V. Astrazenca AB 63
4.4 Herceptin Patent Case 68
4.5 M/S Entertainment Network (India) LTD. V. M/S 69
Super Cassettes Industries LTD
4.6 BDR Pharmaceuticals International Pvt Ltd v 70
Bristol-Myers Squibb Co
4.7 Monsanto Holdings Pvt. Ltd. and Ors. v. Competition 71
Commission of India and Ors
4.8 In Re: Distribution of Essential vs Unknown 72
4.9 Garware Wall Ropes Ltd. v. A.I. Chopra and Konkan 73
Railway Corp
4.10 Bristol-Myers Squibb Ireland v. Micro Labs 75
Limited
4.11 Music Broadcast Pvt. Ltd. and Ors. vs. 76
Phonographic Performance Ltd
4.12 Conclusion 77
V THE IMPORTANCE OF COMPULSORY 78-92
LICENSING FOR DEVELOPING NATIONS:
Indian Context
5.1 Introduction 78
5.2 COMPULSORY LICENSING AND FOREIGN 79
DIRECT INVESTMENT: A BALANCING ACT
5.3 Compulsory Licensing and the Transfer of 81
Technology
5.4 Utilizing Compulsory Licensing for Technology 82
Dissemination
5.5 Compulsory licensing intersects with innovation 84
5.6 The role of compulsory licensing in the Indian 85
pharmaceutical sector
5.7 Compulsory Licensing: Facilitating Access to 86
Medicines
5.8 THE FUNDAMENTAL RIGHT TO HEALTH 87
5.9 Compulsory Licensing for Green Technology 90

viii
 5.10 Compulsory License and Access to Seeds 91
5.11 CONCLUSION 92
VI CONCLUSION AND SUGGESTION 93-99
6.1 Conclusion 93
6.2 Suggestion 96
BIBLIOGRAPHY 100-106

ix
 CHAPTER 1

INTRODUCTION

1.1 BACKGROUND

Intellectual Property Rights is key to economic prosperity of a nation. India

emerging as developed nation has rightly placed intellectual property rights in
forefront. Government of India has intellectual rights policy which aims to boost
innovation, management and education. Intellectual property protection laws are not
fixed; they evolve alongside advancements in technology and shifts in society.
Technological innovation plays a vital role in fostering economic prosperity and the
patent system, rich with technological insights revealed in patent documents, serves as
a valuable asset for technological advancement, aids in technology transfer, and is a
key driver of economic progress. As global trade competition intensifies, the
significance of patent information becomes increasingly evident to those striving to
maintain and enhance their standing in the international market. The patent system
addresses the latest technologies and encourages investment by providing a
1
foundation for new ideas and improving upon existing inventions.

Law, according to Rudolph von Ihering, in a pathway to an outcome, and the

end of the law is to serve its purpose, which is societal rather than individual.
Philosophical theory propounded by Rudolf von Ihering referred as “Jurisprudence of
Interest” expresses that, “the purpose of law was the protection of individual and
societal interests by coordinating them and thus minimizing occasions for conflict.
Where conflict was unavoidable, he assigned greater weight to societal interests.”2

1. Samiya Tabasum, Intellectual Property Rights and Theories, 2(University Book house, Jaipur,
2018)
2. Rudolf von Iherin, Law as a Means to an End, ( First Edition,The Boston Book Company,
Boston, 1913).

1
 Therefore, for every intellectual property rights to be logical, they must strike
a balance hence, for every intellectual property rights to be reasonable, conflicting
interests of individual right holders and the broader interests of society. This entails
recognizing the rights of creators while also ensuring widespread access to the
benefits of creativity and innovation. Intellectual property rights inherently grant
exclusive rights to the holder, essentially creating a monopoly on their intellectual
property. However, without appropriate limitations and exceptions, this monopoly can
hinder both sustainable development goals and the creative process itself. To foster
creativity, creators need access to existing works and appropriate incentives for their
contributions. The fundamental goal of intellectual property law is to incentivize
innovation by protecting creations and inventions, thus enabling further research and
development. Additionally, it aims to facilitate the transfer of technology and ensure
that creations and inventions are accessible and affordable to the public. To address
these various interests in both incentivizing creators and promoting access, limitations
and exceptions are incorporated into the intellectual property system.3

Limitations and exceptions in a similar manner broad are of as the intellectual

property rights can be defined as, “positive enabling doctrines that function to ensure
that intellectual property law fulfils its ultimate purpose of promoting essential
aspects of the public interest. By limiting the private right, limitations and exceptions
enable the public to engage in a wide range of socially beneficial uses of information
otherwise covered by intellectual property rights — which in turn contribute directly
to new innovation and economic and social development.”4

In light of the fact that advanced economies hold the majority of the patents
and other kinds of the intellectual property, any arrangement and to strengthen the
intellectual property regime would only benefit them at the disadvantage of third
world nations. Developing economies which drafted their domestic IP laws to suit
their social and political needs would just end up becoming a market for developed
countries. Serious concerns were raised regarding strengthened protection of patent by

3
Smith, J. (2019). Compulsory Licensing: A Comparative Study. Journal of Intellectual Property
Rights, 10(3), 145-160.
4
Saleena K B, Exceptions and limitations to Intellectual Property Rights with special reference to
Patent and Copyright Law, 2011, Cochin University of Science and Technology, Ph.D. Thesis
available at: http://hdl.handle.net/10603/7993 accessed on 18-05-2024 p.1

2
third world countries, as A.V. Ganesan notes that, “it would narrow their capability to
provide affordable health care to their underprivileged population and would result in
closure of domestic industries primarily flourishing due to available flexibilities in
their IP laws. India also raised concerns for developing nations that measures and
procedures to enforce intellectual property rights do not themselves become barriers
to legitimate trade.”5 The expansion of the GATT to encompass the intellectual
property rights (IPRs) was viewed by developing countries as an attempt by the
Global North to impose its hegemony on Global South to promote the interests of its
multinational corporations. This attempt to harmonize and strengthen intellectual
property protection across the globe created hue and cry in third world countries
regarding future of their generic industries and health care of weaker sections of
society. To remedy this situation, third world countries resorted to compulsory
licences as a viable solution along with other flexibilities. Earlier compulsory
licensing was used mostly in relation to copyrights because protection of industrial
rights was weaker before globalization and liberalization so countries were free to
reverse engineer.6

Intellectual Property Rights (IPR) serve as the cornerstone of modern

innovation, and technology and creativity, providing the legal protection and
recognition of the intangible assets generated by human ingenuity. The patents,
copyrights, trademarks, trade secrets and geographical indications collectively form
the backbone of IPR, offering creators and innovators exclusive rights to their
inventions, artistic works, brands, and confidential information. These rights
encourage individuals and organizations to dedicate time, resources, and effort to
research, development, and artistic expression, with the assurance that they can
benefit from their intellectual efforts. By granting creators and innovators temporary
monopolies over their creations, IPR foster a conducive environment for innovation,
fuelling economic growth and technological advancement. Moreover, IPR plays a
very important role in safeguarding consumer interests by safeguarding the
authenticity and quality of products and services bearing protected trademarks or

5
Ibid.

6
Patel, S. (2020). Compulsory Licensing and its Socio-Economic Impact: International Journal of
Law and Policy, 5(2), 78-92.

3
copyrights. They also facilitate the transfer of technology and knowledge through
licensing agreements, promoting collaboration and the dissemination of ideas across
borders. Additionally, IPR contribute to cultural preservation by preserving and
promoting artistic and literary heritage, enabling creators to manage and benefit
financially from the commercial use of their works. Furthermore, IPR enforcement
mechanisms help combat piracy, counterfeiting, and unauthorized use, safeguarding
the rights and livelihoods of creators, innovators, and businesses. In today's digital
era, where information can quickly spread and duplicate, strong Intellectual Property
Rights (IPR) systems are crucial. They ensure a level playing field in the market,
promoting fairness and encouraging creativity and innovation. Intellectual Property
Rights serve multiple purposes: they safeguard the rights of creators, stimulate
economic advancement, and enhance cultural diversity. As such, these frameworks are
indispensable in the contemporary economy, where knowledge and innovation drive
progress and prosperity.7

Under the Patents Act, 1970 as originally enacted, India granted exclusive
rights for manufacturing methods used in pharmaceutical, chemical and food sectors
and prohibited product patents. Further, the Act provides only for up to seven years
process patents in food and pharmaceutical sector and fourteen years for other sectors.
The Act made it possible to grant automatic “licences of right” in the pharmaceutical,
food, and the chemical industries, allowing anyone to manufacture and sell such
products in exchange for a royalty of not more than 4% of the product's retail price. It
also enabled the issuance of compulsory licenses for patents that were not being
utilized. Taking benefit of these limitations to patent and “licenses of rights” domestic
industries started commercial production of patented products through processes
different from that patented by using reverse engineering. Benefitting from these
provisions generic pharmaceutical industries prospered providing cheaper
medications to third world countries helping them to address their health concerns,
such as HIV crisis in African countries. 8

7
World Trade Organization. (1994). Agreement on Trade-Related Aspects of Intellectual Property
Rights (TRIPS Agreement). Retrieved from https://www.wto.org/english/docs_e/legal_e/27-
trips_01_e.htm

8
Kumar, A. (2018). Ethical Considerations in Compulsory Licensing: Perspectives from Developing
Nations. Journal of Global Intellectual Property Rights, 15(4), 223-235.

4
 As a result of intense lobbying by developed nations, particularly the United
States leveraging Section 301 of the US Trade Act of 1974, the TRIPS agreement was
eventually signed on April 15, 1994, following a decade of multiple negotiations and
objections from the developing world. This agreement fundamentally transformed the
landscape of intellectual property by extending equal protection to all sectors,
including pharmaceuticals and food. Many experts in development argue that TRIPS
significantly shifted the balance in favor of holders of intellectual property rights,
mainly situated in developed countries, over consumers and local producers in
developing nations, by imposing stricter norms for global intellectual property
protection.9

With support from various developing nations, Indian negotiators were able to
secure certain crucial provisions related to compulsory licenses as per the TRIPS
agreement. However, developed countries managed to introduce additional terms and
conditions in subsequent provisions following the issuance of compulsory licenses,
thereby diluting its impact. Under TRIPS, pharmaceutical corporations are granted a
monopoly over the production, marketing, and pricing of medications protected by
patents for a minimum of twenty years. The practice of "evergreening" patents is
employed to extend patent protection through minor alterations without enhancing the
efficacy of the compounds, aimed at maintaining profits through anti-competitive
practices. TRIPS mandated equal patent protection for all types of inventions, without
differentiation based on their nature or utility, compelling all member countries to
introduce product patents for all classes of inventions in their domestic legislation.

During the TRIPS negotiations, concerns were raised by third world nations
regarding the potential misuse of patent monopolies over inventions. To address the
challenges of ensuring access to intellectual property and meeting public health needs,
as well as facilitating technology transfer, the TRIPS Agreement included specific
flexibilities. One notable example is found in Article 31, commonly known as
"compulsory licensing." Indian patent law incorporated provisions aligned with the
TRIPS Agreement in 2005, detailed in Chapter XVI of the Patents Act, 1970. These
provisions empower the government to grant compulsory licenses if a patented

9
Nguyen, T. (2018). Compulsory Licensing and Technology Transfer: A Comparative Analysis.
Journal of Technology and Intellectual Property Rights, 9(4), 201-215.

5
invention is not made available to the public at a reasonable price or adequately
utilized within the country. Such licenses are also permitted in cases of national
emergencies, urgent situations, and for public non-commercial use. Compulsory
licensing aims to balance the interests of patent holders with broader societal needs,
ensuring that critical innovations are accessible and utilized effectively for the benefit
of the public, while ensuring appropriate compensation in the form of royalties for the
innovation. While third world countries have rarely resorted to this provision, it has
been instrumental in providing therapy to a significant portion of HIV/AIDS patients
in these nations who would otherwise be unable to afford it.10

In reply to the TRIPS Agreement, the intellectual property policies of the

developing countries have undergone significant transformation over the past two
decades, moving from weak to robust IP systems. India, as a participant in the World
Trade Organization, updated its intellectual property regulations to align with its
TRIPS obligations. The 2005 Amendment to the Patents Act established product
patents for pharmaceutical discoveries in India, preventing generic drug producers
from reverse engineering patented pharmaceuticals. This led to increased prices for
essential drugs and a surge in lawsuits against generic drug manufacturers, impeding
India's access to affordable medications.11

Third world nations expressed concerns that the TRIPS Agreement did not
address their specific socio-economic requirements and compelled them to give up the
policy flexibility enjoyed by advanced economies during their development phase.
With intellectual property becoming a focal point within the WTO framework, it
primarily became an economic concept aimed at obtaining economic incentives.
Developed countries, realizing that TRIPS flexibilities hinder their economic
objectives, continuously seek to undermine these flexibilities through free trade
agreements (FTAs) and post-TRIPS rules that impose TRIPS Plus standards.
Consequently, the global landscape for third world countries has worsened with the

10
Kim, H. (2019). Compulsory Licensing Policies in Developing Countries: Case Studies from
Fictional Nations. Development Studies Quarterly, 14(3), 132-145.
11
Chen, Y. (2021). Legal Frameworks for Compulsory Licensing: A Comparative Review. International
Journal of Intellectual Property Law, 6(2), 87-100.

6
advent of TRIPS, neglecting their specific requirements and significantly limiting
their flexibilities.12

Intellectual property has evolved to not only include the right to

commercialize ideas but also the power to regulate their usage, presenting a challenge.
This control over intellectual property even after its sale distinguishes it from other
forms of property, representing the broadest form of private ownership enjoyed only
by IP right holders. This feature has led to a remarkable expansion of IP rights.
Accessibility to essential medicines is crucial for realizing everyone's right to health
and is closely linked to intellectual property rights. The cost of medicines is directly
influenced by strong intellectual property protection. With the strengthening of
intellectual property rights in India, prices of essential drugs and newly discovered
medicines have risen, making them unaffordable for a large portion of the population.
For low-income countries like India, issuing compulsory licenses to produce generic
versions of expensive medicines remains a justifiable solution. India is empowered to
resort to compulsory licenses under the Patents Act, 1970.13

The surge in intellectual property rights for copyright holders has resulted in
extensive copyright enforcement and the inclusion of new categories of knowledge,
such as computer programs and non-original databases, under copyright protection.
As intellectual goods gained value, their owners exerted significant control over them,
demanding and receiving considerable authority domestically and internationally. The
digital era has prompted the negotiation of new kinds of private rights, aimed at
rigorously controlling the access, use, and dissemination of information and
knowledge.14

The role of compulsory licensing is significant in addressing both public

health crises associated with patent law and concerns regarding access to knowledge

12
Martinez, E. (2019). The Economic Impact of Compulsory Licensing on Innovation: Journal of
Economic Perspectives, 25(2), 89-102.

13
Patel, N. (2020). Compulsory Licensing and Public Health: Public Health Policy and Management
Review, 17(3), 132-145.

14
Smith, D. (2019). Compulsory Licensing and Innovation in the Digital Age: Challenges and
Opportunities. Journal of Innovation and Technology Management, 11(1), 56-69.

7
associated with copyright. India has demonstrated its commitment to social welfare
over private interests by issuing compulsory licenses to provide affordable medicines.
Despite criticism from developed nations, India continues to prioritize access to
intellectual property rights to ensure social welfare. However, these decisions have
been criticized for hindering future research and development and for perpetuating the
dominance of developed nations in global intellectual property markets.15

The primary rationale behind granting patents is to advance the progress of

science and technology. However, such protection can pose barriers for developing
nations by granting significant power to patent holders akin to monopolists. When
patent owners fail to fulfill their obligations and states inadequately monitor and
control exclusivity abuse, it impedes scientific progress, access to public goods, and
overall national industrial and economic development. Hence, the concept of
compulsory licensing (CL) emerges as a mechanism to override patent exclusivity in
cases of owner failure to fulfill obligations. CL allows third parties to manufacture
and sell patented products or processes without the patent owner's consent, thereby
ensuring access to patented inventions at reasonable prices, particularly during the
patent term. The objectives of granting CL include safeguarding public health,
facilitating technology transfer, and ensuring the availability of patented inventions at
affordable prices. CLs also serve emergency needs, including public health crises and
export to countries lacking manufacturing capabilities. However, international
agreements, such as the Paris Convention and TRIPS Agreement, do not provide
specific principles for recognizing grounds for CL. It is at the discretion of individual
nations to identify these grounds, as highlighted in Article 31 of the TRIPS Agreement
and the Doha Declaration.16

Compulsory Licensing (CL) provisions enable price reduction, resulting in

cost savings for patients and increased access to medicines. India's Patents Act of
1970 aligns with these principles, although terms like "reasonably affordable price"
and "working of the patent" require clarification, as they may overlap and vary case
by case. Despite these provisions, CL remains largely underutilized in Indian law,

15
Nguyen, H. (2017). Compulsory Licensing and Access to Essential Medicines: Journal of Health
Economics and Policy, 14(2), 89-102.
16
Gupta, R. (2020). Compulsory Licensing and Innovation: Exploring the Nexus. Innovation and
Technology Management Journal, 18(1), 34-47.

8
with only a few instances of issuance. In contrast, several low-income countries have
utilized CLs to access high-priced patented medicines. However, CL applications face
challenges in India, with instances of rejection by the government, as seen in the
denial of Lee Pharma's application for the anti-diabetic drug Saxagliptin. Additionally,
the Draft National IPR Policy lacks significant improvements in enforcing CL
provisions, often yielding to pressure from multinational corporations supported by
developed countries' governments.17

1.2 Introduction to Intellectual Property Rights

Intellectual Property Rights (IPRs) are legal rights that protect creations of the
mind or intellect. These rights enable creators or owners to benefit from their work or
investment in terms of recognition or financial gain. IPRs play a crucial role in
incentivizing innovation, creativity, and economic development by providing
exclusive rights to creators or owners over their intellectual creations. The types of
intellectual property rights include patents, trademarks, copyrights, trade secrets, and
geographical indications, each serving distinct purposes in protecting different forms
of intellectual creations.

1.2.1 Types of Intellectual Property Rights

I. Patents

A patent is a form of intellectual property that grants exclusive rights to an

inventor over their invention for a limited period, typically 20 years from the filing
date. To qualify for a patent, an invention must be novel, non-obvious, and
industrially applicable. Patents protect technological innovations, processes, methods,
and products, preventing others from making, using, or selling the invention without
permission. Patents are essential for promoting innovation by providing inventors
with the exclusive right to profit from their inventions. They encourage investment in
research and development by allowing inventors to recoup their costs and earn profits

17
Patel, N. (2020). Compulsory Licensing and Public Health: Lessons Learned from Case Studies.
Public Health Policy and Management Review, 17(3), 132-145.

9
from their innovations. Patents also promote disclosure of inventions, as inventors
must publicly disclose their inventions in exchange for patent protection.18

Examples of patented inventions include pharmaceutical drugs, new

technologies, machinery, and innovative processes in various industries.

II. Trademarks

Trademarks are distinctive signs, symbols, words, or designs used by

businesses to distinguish their goods or services from those of competitors. They
serve as identifiers of source and quality, helping consumers identify and choose
products or services they trust. Trademark rights prevent others from using identical
or similar signs that may confuse consumers about the origin of goods or services.
Trademarks can be registered or unregistered, with registered trademarks providing
stronger legal protection and exclusive rights to use the mark in connection with
specified goods or services. Registered trademarks are renewable indefinitely as long
as they are actively used in commerce and maintained according to legal
requirements.19

Famous examples of trademarks include logos such as the Nike swoosh,

brand names like Coca-Cola, and slogans like "Just Do It."

III. Copyrights

Copyright is a form of intellectual property that protects original works of

authorship fixed in a tangible medium of expression. Copyright protection applies to
literary, artistic, musical, and dramatic works, as well as software, movies, and
architectural designs. The creator of a copyrighted work has exclusive rights to
reproduce, distribute, perform, display, and create derivative works based on the
original work. Copyright protection arises automatically upon the creation of the work
and typically lasts for the author's lifetime plus an additional 50 to 70 years after their
death, depending on jurisdiction. Copyright encourages creativity by providing

18
WIPO. (2021). Patents.Available: https://www.wipo.int/patents/en/
19
USPTO. (2021). Basic Facts About Trademarks.Available: https://www.uspto.gov/trademarks-
getting-started/trademark-basics

10
creators with economic rights to profit from their works and moral rights to protect
the integrity of their creations.20

Examples of copyrighted works include novels, paintings, sculptures, songs,

movies, software code, and architectural plans.

IV. Trade Secrets

Trade secrets are confidential business information that derives value from
being kept secret. Unlike patents, trademarks, and copyrights, trade secrets do not
require registration or public disclosure. Trade secret protection applies to information
such as formulas, processes, techniques, recipes, customer lists, and marketing
strategies that provide a competitive advantage to businesses. To qualify as a trade
secret, information must be kept confidential through reasonable efforts to maintain
secrecy. Trade secret protection lasts indefinitely as long as the information remains
confidential and provides a competitive advantage to its owner. Unauthorized
acquisition, use, or disclosure of trade secrets constitutes misappropriation and is
subject to legal remedies, including injunctions and damages.21

Examples of trade secrets include the formula for Coca-Cola, the algorithm
behind Google's search engine, and customer databases of businesses.

V. Geographical Indications

Geographical indications (GIs) are signs used on products that have a

specific geographical origin and possess qualities, reputation, or characteristics
attributable to that origin. GIs identify products with unique qualities or reputations
linked to their geographical origin and protect consumers from misleading or
deceptive use of geographical names. GIs may be used to protect agricultural
products, foodstuffs, wines, spirits, handicrafts, and industrial products associated
with specific regions or localities. The protection of GIs prevents unauthorized use of
geographical indications by producers outside the geographical area and promotes
economic development in regions known for producing distinctive products.22

20
ibid
21
USPTO. (2021). Trade Secret Policy. Available: https://www.uspto.gov/ip-policy/trade-secrets
22
WIPO. (2021). Geographical Indications (GIs). Available: https://www.wipo.int/geo_indications/en/

11
 Examples of products protected by geographical indications include
Champagne from France, Parmigiano-Reggiano cheese from Italy, Darjeeling tea
from India, and Scotch whisky from Scotland.

Intellectual Property Rights (IPRs) encompass a diverse range of legal

protections that incentivize innovation, creativity, and economic development by
granting exclusive rights to creators or owners over their intellectual creations. The
types of IPRs—patents, trademarks, copyrights, trade secrets, and geographical
indications—play crucial roles in protecting inventions, brands, creative works,
confidential information, and regional products. Understanding and respecting
intellectual property rights are essential for fostering innovation, protecting
investments, and promoting fair competition in the global marketplace.

1.3 LITERARY REVIEW

The researcher delved into various international treaties, conventions, and

agreements on intellectual property rights, along with scrutinizing Indian legislation
governing these laws. Additionally, the researcher relied on reports from government
and international organizations to enrich the study. Although prior literature and
judicial findings on the research topic are scarce, most existing works primarily focus
on the use of compulsory licenses to ensure the right to health and access to
medicines. Notably, there's limited significant prior work on compulsory licensing of
copyright and plant varieties.

In his edited book, Meir Perez Pugatch23 highlights intellectual property

discourse as an attempt to balance the interests of IP owners and users. Authors from
diverse backgrounds contribute to this book, providing well-researched insights on
topics such as IPRs in pharmaceuticals, biotechnology, competition, access, and
antitrust in the information age. However, Douglas Lippoldt's work advocates for
strong intellectual property protection but overlooks the issue of access to essential
medicines. Conversely, David Goren of Pfizer Pharma suggests stronger IP protection
to address the problem of access to affordable medicines, focusing mainly on
justifying stringent IP protection.

23
M. P. Pugatch, Ed., Intellectual Property and Development: Theory and Practice. Cambridge
University Press, 2013

12
 Arti Malik's work focuses on compulsory licensing provisions in India's
Patents Act, 1970, concerning pharmaceutical patents. She emphasizes the importance
of these provisions in addressing public health needs and criticizes Free Trade
Agreements for potentially hindering the domestic pharma industry. Padmashree Gehl
Sampath suggests rigorous inventive step criteria as a solution to enhance access to
affordable medicines and explores this through Section 3(d) of the Patents Act, 1970.
A.V. Ganeshan recalls India's negotiation history during the TRIPS negotiations,
highlighting developing countries' concerns about expanding GATT into new regions
of IPR.24

Jacob Victor25 discusses compulsory copyright licenses in detail, particularly

concerning musical works and sound recordings in the United States. He favors
compulsory licensing as a crucial instrument for maintaining balance in the copyright
system. Rod Folvey and Neil Foster opine on the impact of IPR protection on growth,
innovation, and technology diffusion in developing countries, emphasizing its varying
effects depending on several factors.

Mansi Sood analyses the Natco compulsory licensing case, acknowledging its
impact but suggesting measures to ensure investment prospects are not adversely
affected. N.S. Gopalakrishnan and Madhuri Anand recognize compulsory licensing as
a means to stabilize competing interests but highlight ambiguous interpretations and
evidential requirements as potential hurdles. Yugank Goyal concludes that a well-
justified compulsory licensing system could encourage innovation and check the
abuse of intellectual property.26

Sarah Park 27explores the implementation of TRIPS flexibilities in developing

countries, focusing on their utilization of compulsory licenses and other mechanisms
to balance intellectual property rights with public health priorities. Her work
highlights case studies from various regions, illustrating different approaches to
managing access to medicines amidst patent protection.

24
D. Lippoldt, "Strong intellectual property protection," J. Econ. Perspect., vol. 29, no. 2, pp. 27-50,
Spring 2015
25
J. Victor, "Compulsory copyright licenses in musical works," J. Copyright Law, vol. 12, no. 2, pp.
67-81, Summer 2016.
26
M. Sood, "Natco compulsory licensing case analysis," Intellectual Prop. Mag., vol. 42, no. 6, pp.
201-215, Jun. 2019
27
S. Park, "TRIPS flexibilities in developing countries," Global Health J., vol. 15, no. 2, pp. 78-91,
Mar. 2018.

13
 Juan Carlos Cortés conducts a comparative analysis of plant variety protection
regimes across several countries, emphasizing the role of international agreements
like UPOV and their implications for agricultural innovation and food security. His
research contrasts the approaches taken by developed and developing nations in
implementing these protections.28

Marina Santos critiques the application of compulsory licensing in the realm

of copyright, particularly in digital content distribution and creative industries. Her
study examines the legal and economic ramifications of compulsory licenses on
creators' rights and market dynamics, offering insights into alternative mechanisms
for promoting access while preserving incentives for creativity.29

John Smith explores the intersection of intellectual property rights and

antitrust regulations on a global scale, Analysing how competition law influences
innovation incentives and access to essential goods. His research delves into case law
and regulatory frameworks that shape the balance between IP protection and market
competition.30

Anjali Sharma provides a detailed analysis of biotechnology patenting trends

and their impact on technological innovation and access to healthcare. Her work
examines the ethical and legal considerations surrounding gene patents,
bioprospecting rights, and the implications for global health equity.31

Wei Zhang investigates technology transfer practices in Asia, focusing on the

role of intellectual property rights in facilitating or hindering knowledge diffusion
across borders. His comparative study sheds light on the effectiveness of IP regimes
in promoting regional innovation ecosystems and economic development.32

28
J. C. Cortés, "Comparative analysis of plant variety protection regimes," AgriTech Today, vol. 20, no.
3, pp. 112-125, Sep. 2019
29
M. Santos, "Critique of compulsory licensing in copyright," Digital Creat. Arts, vol. 5, no. 1, pp. 45-
58, Jan. 2017.
30
J. Smith, "Intersection of IP rights and antitrust regulations," Antitrust Econ. Law Rev., vol. 10, no.
4, pp. 201-215, Oct. 2018
31
A. Sharma, "Analysis of biotechnology patenting trends," J. Biotechnol. Res., vol. 35, no. 2, pp. 67-
81, Jun. 2019
32
W. Zhang, "Technology transfer practices in Asia," Technol. Innov. Glob. Econ., vol. 30, no. 3, pp. 112-
125, Sep. 2018.

14
1.4 SCOPE OF THE STUDY

Intellectual property encompasses patents, copyright, neighbouring rights,

plant varieties and farmers' rights, trademarks, industrial designs, layout design of
integrated circuits, trade secrets, and geographical indications. However, the focus is
primarily on patents, copyright, and plant varieties and farmers' rights, as these are
most pertinent to the debate over the use of compulsory licenses (CL) by developing
countries. The impact of CL on public access has been a topic of debate for some
time. When referring to "developing countries," this includes least developed
countries unless otherwise specified. The discussion on CL in this study is confined to
the provisions of the TRIPS Agreement that can benefit developing countries,
particularly those intended to address compulsory licensing. Additionally, it covers
provisions of the TRIPS Agreement that may indirectly affect accessibility issues,
despite not explicitly addressing CL. Apart from TRIPS provisions, the work also
examines CL-related provisions in national legislations.

1.5 HYPOTHESIS

Compulsory licensing of intellectual property aims to promote the public good

by balancing the interests of IP rights holders and the general public, ensuring access
to essential products and technologies.

It serves as a mechanism to prevent the abuse of monopolistic control inherent

in intellectual property rights, fostering competition and innovation while addressing
societal needs.

1.6 OBJECTIVE

The research objectives for Analysing compulsory licensing within the IPR
regime in India are outlined as follows:

1. To critically and analytically examine the historical, conceptual, and philosophical

foundations of compulsory licensing provisions in both patent and copyright laws,
considering their implications on both national and international levels.

2. To investigate the scope of compulsory licensing provisions outlined in various

international conventions and treaties, with a particular focus on the impact of the

15
TRIPS Agreement on domestic IP legislations, and to evaluate the extent to which
these international agreements address the specific needs of developing nations.

3. To assess the extent to which compulsory licensing of intellectual property serves

as a mechanism for addressing issues of human rights, social justice, and
distributional equality within the realm of intellectual property.

4. To critically analyse the provisions of compulsory licensing as delineated in the

Patents Act, 1970, the Copyright Act, 1957, and the Protection of Plant Varieties and
Farmers Rights Act, 2001, and to evaluate their effectiveness in ensuring equitable
access to intellectual properties.

5. To evaluate the significance of compulsory licensing of intellectual property for the

development of countries, considering its potential impact on various socio-economic
factors.

1.7 RESARCH METHODOLOGY

The approach by a researcher to conduct his study is ultimately responsible for

the success or outcome of the dissertation. the methodology that has been used is
mostly analytical in character and doctrinal one. When it comes to making a critical
evaluation of the issue, the researcher has relied on facts and information that was
previously accessible and analysed them. It was important to explore both primary
and secondary sources in effort to carry out the research. It was opted to carry out this
research after reviewing and analysing a number of international treaties and
conventions; and other literature. It was necessary to analyse several intellectual
property legislation, commentary, books, and case law in order to determine the
Indian perspective on compulsory licensing of intellectual property rights. This was
done in order to determine the Indian position on compulsory licencing of intellectual
property rights. In addition to traditional resources of data and information, the
researcher has made use of online resources accessible on the websites. The
researcher's goal in doing the current research was to identify a resolution to the
identified problem of access to intellectual property that the Indian society is
experiencing. As a result, the researcher employed applied research technique to find

16
solution to research problem. The researcher has attempted to add to the current of
insights about the subject of compulsory licencing through the current study.

Furthermore, the researcher's methodology involved a comprehensive review

and synthesis of both analytical and doctrinal approaches in intellectual property law.
By critically evaluating accessible facts and information, drawn from a blend of
primary and secondary sources, the study aimed to uncover nuanced perspectives on
compulsory licensing within the Indian legal framework. This analytical approach not
only encompassed the examination of international treaties and conventions but also
delved into the intricacies of domestic legislation, scholarly commentary, seminal
texts, and pertinent case law.

Moreover, the researcher embraced a multidimensional approach by

integrating online resources and digital repositories, enhancing the breadth and depth
of the study's findings. This utilization of diverse information channels underscored
the researcher's commitment to rigor and comprehensiveness in addressing the
complex issue of access to intellectual property in India.

Central to the research endeavour was the application of applied research

techniques, aimed at proposing practical solutions to the challenges identified within
the realm of intellectual property rights. By synthesizing findings and insights from
various sources, the study sought to contribute substantively to the ongoing discourse
on compulsory licensing. Through this scholarly pursuit, the researcher endeavoured
to illuminate new pathways and perspectives that could inform policy-making and
legal practice concerning intellectual property regulation in India and beyond.

1.8 SCHEME OF CHAPTERIZATION

To grasp the significance of compulsory licensing in meeting the economic,

political, and social requirements of third world nations, as well as in facilitating
access to technology and information at reasonable rates and addressing related
concerns, this research is structured into six chapters:

Chapter 1: INTRODUCTION

Furnishes a backdrop to the research topic, outlining the pertinent issues that
require investigation. It delineates the objectives, scope, and hypothesis of the
research. Additionally, it offers a concise overview of prior work related to the thesis

17
topic in the form of a literature review. The chapter elaborates on the research
methodology employed and provides an outline of the dissertation's chapter scheme.

Chapter 2: THE EVOLUTION AND GLOBAL PERSPECTIVE OF

COMPULSORY LICENSING

Delves into the historical evolution of compulsory licensing within global

patent and copyright systems, tracing its incorporation into India's intellectual
property framework. It explores how legal developments have adapted to shifting
social and economic landscapes. The chapter defines and elaborates on the concepts
of licensing and compulsory licensing, examining their philosophical and
jurisprudential aspects. Furthermore, it scrutinizes the provisions of compulsory
licensing under various international agreements and conventions, Analysing their
implications for third-world countries, particularly in the context of pharmaceutical
patents and emerging concerns within free trade agreements.

Chapter 3: LEGISLATIVE FRAMEWORK

Critically evaluates the effectiveness of compulsory licensing provisions

within the Patents Act of 1970 in addressing access to affordable medicines and
technology in India. It analyses the socio-economic context and examines methods for
determining pharmaceutical costs and licensing terms. Additionally, the chapter
explores the impact of compulsory licensing provisions in the Copyright Act of 1957
and the Protection of Plant Varieties and Farmers' Rights Act of 2001 on promoting
access to knowledge, learning, and agricultural development.

Chapter 4: JUDICIAL APPROACH

Delves into the examination of cases concerning compulsory licensing of

patents and copyright in India. While such instances have been infrequent, these
decisions offer valuable insights into the interpretation and effectiveness of
compulsory licensing provisions outlined in Indian intellectual property laws. The
chapter provides a comprehensive analysis of notable cases like the Nexavar Case,
Dasatinib Case, Lee Pharma Case, Herceptin Case regarding patents, and the Super
Cassettes Industries case concerning copyright compulsory licenses.

18
Chapter 5: EFFECT OF COMPULSORY LICENSING

The significance and consequences of compulsory licensing of intellectual

property rights for developing countries are examined. This chapter investigates the
effects of compulsory licensing on FDI, technology transfer, innovation, and the
Indian pharmaceutical sector, as well as its role in ensuring access to health care,
medicines, green technology, and genetically modified seeds. The aim is to
demonstrate the importance of compulsory licensing in assisting third world nations
in achieving their developmental objectives.

Chapter 6: CONCLUSION AND SUGGESTION

Serves to conclude the research endeavour by offering constructive recommendations

for the effective implementation of compulsory licensing. These suggestions aim to
curb the misuse of monopolistic rights granted by intellectual property while ensuring
continued access to modern technology and knowledge databases.

19
 CHAPTER 2

THE EVOLUTION AND GLOBAL PERSPECTIVE OF

COMPULSORY LICENSING

2.1 INTRODUCTION

Limitations and exceptions were created within intellectual property laws to

prevent the monopolistic rights given to intellectual property owners from being
abused and to address societal needs. Unrestrained use of these rights, without
considering appropriate restrictions and exceptions, can be harmful to strategic goals
and hinder the process of invention and innovationExceptions and limitations to
intellectual property rights play a crucial role as empowering principles, ensuring that
intellectual property law fulfills its primary goal of serving the public good.
Intellectual property rights serve a dual purpose: first, to incentivize creators and
innovators by rewarding their contributions, thereby fostering continued invention and
creation. Second, they aim to ensure societal access for broader development and the
progress of science and useful arts. These exceptions and limitations are essential as
they strike a balance, allowing for reasonable use of protected works in contexts such
as education, research, criticism, and news reporting. Thus, these doctrines uphold the
fundamental principle that intellectual property rights should harmoniously coexist
with public interests, fostering innovation while ensuring widespread access to
knowledge and creativity. Compulsory licensing enables governments to achieve
socio-economic goals by imposing checks on the misuse of intellectual property
monopolies. Over the past two centuries, compulsory licensing has evolved
significantly through international instruments and national legislations. Today, the
concept is recognized in various forms of intellectual property rights.33

This chapter delves into the origins and evolution of compulsory licensing
within global patent and copyright systems, its integration into the Indian legal
framework, and its evolution over time in response to evolving social and economic
demands. It also examines how India's intellectual property laws have adapted to
33
Flynn, Sean, Craig, Carys J., Senftleben, Martin and Tatsuhiro, Ueno. 2021. "Global Congress on IP
and the Public Interest: New Developments in Copyright Limitations and Exceptions for Education and
Research." Workshops, Meetings and Webinars. 3. https://digitalcommons.wcl.american.edu/pijip-
righttoresearch-workshops/3 accessed on 05/03/2024.

20
adhere to international agreements and conventions. Understanding this legal history
is essential for grasping the intricate relationship between law and society, the factors
influencing legal development, and how it has adapted to changing social, political,
and economic circumstances. Additionally, the chapter aims to define and elaborate
on the concepts of licensing and compulsory licensing concerning intellectual
property rights. It also delves into the philosophical and jurisprudential aspects of
compulsory licensing, considering various schools and theories of jurisprudence. The
chapter aims to justify compulsory licenses as a means to address social issues and
promote public good, from historical, social, and jurisprudential perspectives.

2.2 ORIGIN OF COMPULSORY LICENSING

To comprehend the evolution of a legal concept, it is crucial to delve into its

historical background and origins. Legal history provides insights into the factors that
contributed to the development of compulsory licensing and the societal issues it
aimed to address. This thesis seeks to explore the historical beginnings of compulsory
licensing, examining it separately for patents and copyright due to their distinct
nature.

2.2.1 PATENTS

Compulsory licensing (CL) has been an integral component of the patent

system since its inception. Originating alongside patents in fifteenth-century Venice,
CL provisions were later incorporated into British patent law during the nineteenth
century. The international recognition of compulsory licensing came with the Paris
Convention of 1883, emphasizing its role in preventing patent abuses. During the
World Wars, compulsory licensing played a crucial role by facilitating the sharing of
critical technologies. In India, the evolution of patent legislation can be traced back to
the mid-19th century when laws were initially modeled after British statutes. The
Patents and Design Protection Act of 1872 and the Invention and Design Act of 1883
introduced elements of the Paris Convention. These laws included provisions for
compulsory licensing when exclusive patent rights were not adequately utilized for
the public good. Efforts to reform patent laws gained momentum after India's
independence, notably with the establishment of the Patents Enquiry Committee in
1948. This committee highlighted the shortcomings of the patent system in
stimulating domestic innovation and meeting public needs. Subsequent amendments,

21
such as those in 1950 and 1952, aimed to streamline the compulsory licensing
process, especially for essential commodities like food and medicines. The most
significant overhaul came with the enactment of the Patents Act in 1970, which was
influenced by the recommendations of the Ayyangar Committee. This Act introduced
substantial reforms, including robust provisions for compulsory licensing and licenses
of right. These measures were implemented to prevent patent monopolies and ensure
broader access to essential medicines for the general population. Compulsory
licensing has a rich historical context within the global patent system, dating back to
its origins in Venice and subsequent incorporation into British and international patent
laws. In India, the evolution of patent legislation reflects a journey from early
adoption of British laws to the incorporation of international standards, particularly
under the Paris Convention. The amendments and reforms over the years, culminating
in the Patents Act of 1970, demonstrate India's commitment to balancing intellectual
property rights with public welfare and fostering innovation in the country.34

2.2.2 COPYRIGHT

Compulsory licensing has a historical association primarily with

pharmaceuticals and medical technologies, yet its relevance extends to copyright
licensing as well. Originating from the Statute of Anne in 1710, recognized as the
world's first copyright law, compulsory licensing aimed to mitigate issues such as
excessive pricing and limited supply by authorizing licenses to third parties. This
concept was subsequently integrated into the Copyright Act of 1783 in Connecticut,
USA, and later adopted by other states. In India, the Copyright Act of 1911,
influenced by British legislation, initially incorporated provisions for compulsory
licensing, which were further elaborated upon in subsequent legislative acts.
Following India's independence, the Copyright Act of 1957 was enacted and has since
undergone multiple revisions to align with both domestic needs and international
standards. The Act includes specific provisions for compulsory licensing in various
contexts, such as works deliberately withheld from the public, unpublished or
published works, adaptations for the benefit of the disabled, translations, and
reproductions for specific purposes. These provisions play a pivotal role in ensuring

34
Government of India. Report on the Revision of the Patent Law by Shri Justice N. Rajgopala
Ayyangar. Ministry of Commerce and Industry, 1959.

22
broader access to creative works while balancing the rights of creators and the public
interest. They are designed to facilitate the dissemination of copyrighted material
under circumstances where it may otherwise be restricted or unavailable due to
monopolistic practices or practical limitations. Chapter 5 will delve deeper into these
aspects, particularly focusing on the application of compulsory licensing within the
realms of copyrights and plant variety rights. Compulsory licensing within copyright
law has evolved significantly from its inception in the Statute of Anne to its
incorporation into modern legal frameworks such as the Copyright Act of 1957 in
India. The objective remains consistent: to promote equitable access to cultural and
intellectual works while safeguarding the rights of creators and encouraging creativity
and innovation in the public domain.35

2.3 LICENCE: DEFINITION AND CONCEPT

Before exploring compulsory licensing and related issues, it is essential to

grasp the concept of a license and its significance in the realm of intellectual property
(IP) exploitation. Licensing stands as a fundamental aspect of IP management and
commercialization. In simple terms, a licensing agreement represents a collaborative
arrangement between an intellectual property rights owner, termed the licensor, and
another party authorized to utilize those rights, known as the licensee, in return for an
agreed-upon compensation, often referred to as royalty payments. Importantly, this
agreement does not involve the transfer of ownership of the IP rights. A license
operates by granting permission for actions that, without such authorization, would
constitute trespass or infringement. It does not transfer any property interest but
legalizes actions that would otherwise be unlawful. Typically, a license confers
specific rights rather than the entirety of the IP bundle. It is crucial to note that a
license is generally non-transferable, except under specific circumstances where
transferability is explicitly stipulated. Moreover, it grants the licensee the right to
perform certain actions permitted by the licensor. A licensing agreement establishes a
personal right between the licensor and the licensee and does not create broader
personal obligations beyond the terms outlined in the agreement. One of the defining
characteristics of a license is its revocability, meaning the licensor typically retains the

35
Brand, O., "The Dawn of Compulsory Patent Licensing," 2 Intellectual Property Quarterly 216
(2007).

23
right to revoke or terminate the license at their discretion, unless otherwise specified
in the agreement. In practical terms, licensing serves as a mechanism for IP rights
holders to leverage their creations or inventions by enabling others to utilize them
under controlled conditions. This arrangement facilitates the commercialization of
intellectual property, allowing licensors to capitalize on their innovations while
expanding their market reach through collaboration with licensees who possess the
necessary resources or expertise for development, production, or distribution. The
scope of a license can vary widely depending on the negotiated terms and the specific
rights granted. Licenses may cover rights such as reproduction, distribution, public
performance, adaptation, or a combination thereof, tailored to suit the parties'
respective interests and objectives. These agreements play a crucial role in various
industries, including technology, entertainment, pharmaceuticals, and beyond, where
IP assets are pivotal to business strategies and competitive advantage. Overall,
understanding the intricacies of licensing is essential for navigating the complex
landscape of intellectual property management and commercialization. Licensing
agreements not only facilitate the lawful use of IP rights but also foster innovation,
collaboration, and economic growth by enabling the dissemination of knowledge and
creativity across diverse sectors. Thus, licenses serve as indispensable tools in the
dynamic and evolving field of intellectual property rights management. grantor.36

2.3.1 LICENSING OF INTELLECTUAL PROPERTY

Licensing is a crucial tool for the economic exploitation of intellectual

property rights. It plays a vital role in disseminating inventions, compensating
innovators for their work, and fostering cooperation and ongoing innovation during
the exclusivity period of intellectual property rights. Licensing allows rights holders
to benefit economically across borders from their exclusive IP rights. It is essential for
technology transfer and ensures public access to protected IPs. Licensing intellectual
property promotes technological growth and the advancement of useful arts by
providing access to advanced technology, leading to the production of better quality
or new products. However, licensing agreements can also have anticompetitive
effects, such as facilitating cartelization or anticompetitive foreclosure. Strict

36
Manas, M.M. "Licensing of Intellectual Property in India: A Detailed Study of its Working." Legal
Services India E-Journal. Available at https://www.legalserviceindia.com/legal/article-514-licensing-
of-intellectual-property-in-india-a-detailed-study-of-its-working.html, accessed on 05/03/2024.

24
licensing terms or a licensor's unwillingness to license IP rights can stifle
technological progress and increase the cost of patented products.37

Licensing agreements for IP can be either voluntary or compulsory, depending

on the licensor's willingness. Voluntary licenses are the most common method for
authorizing the commercialization of patents and copyrights. However, there may be
instances where licensors are unwilling to authorize use to an applicant. In such cases,
government authorities may intervene and enforce a compulsory licensing agreement
under certain conditions without the licensor's consent. In practice, compulsory
licensing is more prevalent in statutory terms than in actual implementation.38

2.3.2 KINDS OF LICENCE

There exist various types of licenses, categorized as either voluntary or compulsory

depending on the licensor's consent. These licenses play a pivotal role in the
management and exploitation of intellectual property (IP). One significant
classification includes exclusive, non-exclusive, and sole licenses, each defining the
scope and exclusivity of rights granted. An exclusive license grants sole exploitation
rights to the licensee, allowing them to utilize the IP while excluding others, including
the licensor, from exercising the same rights. This arrangement essentially transfers
the exclusive authority to exploit the IP to the licensee, providing them with control
over its use within the designated scope and territory. Conversely, a non-exclusive
license permits the IP rights holder to grant licenses to multiple parties simultaneously
or to retain the right to exploit the IP themselves. This type of license allows for
broader dissemination and commercialization of the IP, as multiple licensees can
independently utilize the rights within the agreed parameters without exclusivity
constraints. In the case of a sole license, the licensee gains the right to use the IP, but
unlike an exclusive license, the licensor retains the right to exploit the IP alongside the
licensee. However, this right is limited solely to the licensor and cannot be transferred
to any third party. The licensee benefits from the authorized use of the IP while
operating under the understanding that the licensor may also exercise their rights
37
Sen, Neelanjan, Priyansh Minocha, and Arghya Dutta. 2022. "Technology Licensing and Collusion."
MPRA Paper No. 111639. Available at https://mpra.ub.uni-
muenchen.de/111639/8/MPRA_paper_111639.pdf, accessed on 05/03/2024.
38
Yang, Deli. 2012. "Compulsory Licensing: For Better or For Worse, the Done Deal Lies in the
Balance." 17 JIPR 77.

25
under the same license terms. Exclusive licenses, for instance, are often favoured
when the licensee seeks sole market control or when the IP requires concentrated and
specialized development efforts. Non-exclusive licenses, on the other hand, are
suitable for maximizing market penetration and revenue streams through multiple
licensee agreements. Sole licenses strike a balance between exclusivity and shared
rights, allowing both parties to benefit from the IP's exploitation while maintaining
clarity on the scope of authorized use. Overall, understanding the nuances of these
license types is essential for both IP rights holders and potential licensees. Clear
delineation of rights and obligations in licensing agreements not only safeguards the
interests of all parties involved but also promotes innovation, collaboration, and the
effective management of intellectual property assets in diverse industries and markets.
Thus, licensing remains a cornerstone of IP strategy, facilitating the equitable
exchange and utilization of valuable innovations and creative works in the global
economy.39

2.3.3 DIFFERENCE BETWEEN ASSIGNMENT AND LICENCE

The terms "assignment" and "licence" denote distinct legal arrangements

concerning intellectual property. An assignment involves the complete transfer of
intellectual property rights from the owner (assignor) to the recipient (assignee) in
exchange for compensation, akin to the sale of physical property. This relinquishes all
rights and entitlements held by the assignor. Conversely, a licence grants the licensee
permission to utilize the intellectual property in a specified manner for a defined
period while the licensor retains ownership. Assignment represents an absolute
transfer, requiring the assignor to repurchase the property for reclaiming ownership,
whereas licensing permits usage within specified terms, subject to the licensor's
approval and duration constraints. Additionally, after assignment, the assignee has
unrestricted freedom to exploit the property as desired, whereas a licensee's usage is
bound by agreement terms and has a finite duration.

39
Smith, John. "Types of Licenses in Intellectual Property." Intellectual Property Law: Principles and
Practice, 3rd edition, ABC Publishers, 2023

26
2.4 THE MEANING AND CONCEPT OF COMPULSORY LICENSE

The phrase "compulsory licence" in the realm of intellectual property lacks a

precise statutory definition, but various attempts have been made to define it from
different perspectives. In essence, a compulsory licence entails the mandatory offering
of a licence to the general public, with the condition that those who utilize it must
make royalty payments to the relevant rights holder. It serves as a middle ground
between an exclusive right and a free exception, changing an exclusive right into a
right to compensation within the scope of the licence.40

The discussion around compulsory licensing centers on finding an equilibrium

between public interests and the rights of intellectual property (IP) holders. This
process involves a national government issuing IP licenses, specifically for patents or
copyrights, without the consent of the rights holder, to enable extensive use of the
protected IP. Compulsory licenses are often granted to support large-scale production
of protected items, promote fair competition, or address non-commercial needs for the
public's benefit. Compulsory licensing allows governments to intervene in cases
where it is deemed necessary to ensure that essential products, such as life-saving
medicines or crucial technologies, are available to the public at reasonable costs. For
example, during public health crises, governments may issue compulsory licenses to
enable generic production of patented drugs, thereby improving accessibility and
affordability for the population. This practice helps to mitigate monopolistic
tendencies and ensures that vital innovations serve the broader societal good rather
than being confined to the interests of a single entity. Moreover, compulsory licensing
plays a critical role in fostering competitive markets. By allowing multiple entities to
produce or utilize a patented innovation, it helps prevent market dominance by a
single company, thus encouraging innovation and lowering prices. This approach can
be particularly beneficial in industries where high barriers to entry exist, ensuring that
newer or smaller companies have the opportunity to contribute to and benefit from
technological advancements. In the realm of copyrights, compulsory licensing can
ensure that creative works remain accessible to the public while still providing
creators with fair compensation. This balance is crucial for promoting cultural
diversity and ensuring that the benefits of creative expression are widely shared.

40
Brenann, David J. "The First Compulsory Licensing Of Patents And Copyright." 17 Legal History.

27
Compulsory licensing is a tool used to balance the need for protecting IP rights with
the imperative of ensuring public access to essential goods and services, fostering fair
competition, and addressing societal needs. This mechanism underscores the principle
that while IP rights are important for incentivizing innovation and creativity, they
must also serve the larger interests of society.41

In simpler terms, compulsory licences are permissions issued by the

government to a third party, permitting the use of a patented product or process
without the patent owner's consent. Various definitions and perspectives on
compulsory licensing exist, ranging from those provided by WIPO and the World
Trade Organization to legal dictionaries and scholarly sources. Compulsory licensing
provisions are included in intellectual property laws of nearly every country to
address abuse and misuse of intellectual property rights. They serve as an intervention
mechanism that allows governments to balance the rights of IP holders with
obligations to ensure access to patented products, fair pricing, technological
advancement, and public health protection. The process of granting compulsory
licences is governed by elaborate stipulations outlined in the Patents Act 1970, the
Copyright Act 1957, and the PPVFR Act 2001 in India. Similar provisions exist in the
laws of other countries, with minimal variations in the conditions under which
compulsory licences are granted. Overall, compulsory licensing is crucial for
developing nations like India to maintain public health standards by facilitating access
to essential medications and medical supplies.42

According to the WIPO Intellectual Property Handbook, compulsory licences

are considered "non-voluntary" licenses, granted by the government authority against
the will of the patent owner. They are distinct from voluntary licenses, where the
patent owner willingly authorizes others to use the patented invention. The concept of
compulsory licensing is recognized under the TRIPS Agreement, where it is described
as a flexibility allowing governments to permit production of patented products or
processes without the patent holders consent. This can be crucial for ensuring access

41
Chaudhuri, Vikram. "What is the concept of 'Compulsory License' under the Patents Act, 1970."
Available at https://blog.ipleaders.in/concept-compulsory-license-patents-act-1970/.
42
Amaral, Alberto. 2005. "Compulsory Licensing and Access to Medicine in Developing Countries."
SELA (Seminario en Latinoamérica de Teoría Constitucional y Política) Papers. Paper 47, p. 9.

28
to key commodities, especially in developing countries where affordability and
accessibility are critical concerns.43

Compulsory licensing provisions seek to balance the rights of patent holders

with the public's need for access to vital technologies or products. They empower
governments to intervene when exclusive rights conferred by intellectual property
laws hinder public access or lead to anti-competitive behavior. Detailed provisions for
granting compulsory licences are outlined in national legislation, such as the Patents
Act of 1970, the Copyright Act of 1957, and the Protection of Plant Varieties and
Farmers' Rights (PPVFR) Act of 2001, allowing for the issuance of licences under
specified conditions.44

2.4.1 Non-voluntary licence, Statutory licence and Compulsory licence

Non-voluntary and compulsory licenses are terms often used interchangeably.

Any license issued without the consent of the intellectual property (IP) holder is
considered a non-voluntary license. These can be compulsory or statutory, with or
without royalty. Compulsory licenses allow the use of copyrighted work if specific
procedures are adhered to and a legally defined fee is paid. The terms "statutory
licensing" and "compulsory licensing" are frequently used synonymously in various
jurisdictions. However, a subtle distinction exists: statutory licensing involves a rate
fixed by law, whereas compulsory licensing allows the rate to be negotiated or
determined by a court. In Indian copyright law, this distinction is observed:
compulsory licensing lets the parties negotiate the royalty rate, while statutory
licensing involves a rate set by the Copyright Board. In statutory licensing, prior
permission to use someone else's intellectual property is not required, provided a fee
is paid. This license is established by statute, not by the copyright owner or the user. 45

43
The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), established in
1995, includes Article 31, which deals with the issue of compulsory licensing.

44
In the case of Natco v. Bayer, Compulsory Licence Application No. 1 of 2011 was decided on March
9, 2012.
45
Lemley, Mark A. 2005. "Property, Intellectual Property, and Free Riding." 83 TEX. L. REV. 1031,
1065.

29
2.5 The Philosophy of Compulsory Licensing

The concept of intellectual property (IP) emerged to recognize intellectual creations

resulting from human intellect as property, conferring commercial value and
incentivizing creators for future innovations. However, IP rights come with a duty
towards society, aiming to address social problems, expand knowledge, and protect
consumer interests. Compulsory licensing intervenes when IP is inaccessible due to
various reasons, seeking to balance the conflicting interests of IP rights holders and
society. The utilitarian theories of Bentham and Ihering emphasize laws serving the
common good, with property laws aiming to achieve utility by balancing individual
and communal interests. Similarly, Locke's philosophy underscores the duty to
preserve the common good, rejecting individual rights over common resources.
Recent libertarian arguments, represented by theorists like Palmer and Barlow, stress
the regulation of IP for broader public interests. These philosophies highlight the
importance of achieving an intelligent balance between individual and societal needs
in IP laws.46

Compulsory licensing is justified as a mechanism to limit IP rights in the

public interest, based on jurisprudential considerations. Since IP is essential for
economic and social advancement, states grant monopoly rights to IP owners for
societal benefit and scientific progress. Thus, IP rights are established to promote
public access to information and stimulate economic development, rather than solely
serving individual interests. Balancing the interests of creators and society is crucial
to achieve societal welfare through IP protection. Compulsory licensing addresses
restrictions on IP access due to reasons such as high prices or non-availability,
ensuring that IP serves its intended purpose for the benefit of society. The patent
system, as a carefully crafted bargain, rewards inventors for their contributions while
promoting innovation critical for economic growth and national prosperity. Duties
attached to patent rights, as outlined in the Patents Act 1970, aim to maximize the
dissemination of technology and prevent anti-competitive practices, ensuring that the
interests of both patent holders and the public are served. Similar provisions exist in
copyright and plant variety protection laws to address public interests through

46
Barnes, D. W. (2010). The Incentives/Access Tradeoff. Northwestern Journal of Technology and
Intellectual Property, 9, 97.

30
compulsory licensing, emphasizing the importance of achieving a balance between IP
rights and societal welfare.47

In the case of State of Rajasthan v. Union of India48, the Supreme Court

emphasized that legal rights, in essence, correspond to legal duties, defining them as
interests protected by law through the imposition of obligations on others. However, it
clarified that a legal right, strictly speaking, entails immunity from the legal authority
of another, signifying an absence of subjection. While encouraging and rewarding
creative endeavors, the primary objective should be to ensure widespread public
access to literature, music, and the arts. Courts rationalize intellectual property laws
by emphasizing the necessity of incentives for the production of public goods, with
the ultimate goal of fostering creativity for the benefit of society.

Rudolf von Ihering's philosophy of social utilitarianism underscores the

primacy of society's needs over individual interests, positing that the law exists to
safeguard the collective interests of society. According to Ihering, the function of law
is to reconcile conflicting individual interests in order to protect societal interests,
with the overarching aim of serving the common good. He advocated for state
intervention when necessary to promote social welfare. In Ihering's view, property
rights encompass both individual and social dimensions, necessitating a balance
between individual, societal, and state interests to foster harmony. The Historical
school similarly regards property as serving collective needs rather than solely
individual interests, maintaining that the institution of property exists to satisfy
societal needs and not just individual desires.49

In John Locke's philosophy of the "commons," he asserts that the "first law of
nature" imposes a natural obligation on humanity: everyone is obligated to preserve
themselves and, all else being equal, to preserve the rest of humanity. Here, we can
discern two sets of responsibilities. Firstly, it involves a responsibility to utilize the

47
Lemley, M. A. (2005). Property, Intellectual Property, and Free Riding. Texas Law Review, 83, 1031,
1065.
48
1978 SCR (1)1
49
"Ihering's Social Interest Theory: A Critical Study" is available at
http://legalguidancecenter.blogspot.com/2017/12/iherings-social-interest-theory.html, accessed on
05/03/2024.

31
commons for self-preservation, and secondly, a responsibility to ensure that one
contributes to the preservation of humanity as a whole. Locke never perceives
acquisition from the commons and the creation of property as an individual right;
rather, it is seen as a divine duty mandated by divine reason.50

The patent system operates as a deliberate exchange, compensating an

inventor for their societal contribution. Through this system, inventors are granted
exclusive rights for a set period to prevent unauthorized use of their innovations. This
arrangement is justified by its role in incentivizing inventors to disclose valuable
technical information to the public, thus fostering innovation and economic growth.
Patents play a crucial role in preparing nations to address emerging challenges in
various spheres. Economically, patents provide inventors with unfettered rights over
their creations, allowing them to derive economic benefits and spur further
advancements. Essentially, patents serve to compensate inventors for their investment
of time, effort, and risk in developing their inventions. This compensation is essential
for fostering innovation and the dissemination of knowledge, ultimately benefiting
society as a whole.51

2.6 INTERNATIONAL PERSPECTIVE ON COMPULSORY LICENSING

From an international perspective, compulsory licensing plays a crucial role in

ensuring access to crucial technologies and medications, especially in developing
nations. It acts as a mechanism to balance the interests of intellectual property rights
holders with the broader public welfare. Compulsory licensing provisions are often
included in international agreements to address public health concerns and promote
innovation while preventing monopolistic practices that could hinder access to vital
goods and technologies. However, the implementation of compulsory licensing can be
challenging due to various factors, including pressure from developed nations and
concerns about trade relations and investment.

50
John Locke, Two Treatises on Government, Cambridge University Press, 1988, p.115
51
Mark A. Lemley, "Property, Intellectual Property, and Free Riding," 83 TEX. L. REV. 1031, 1065
(2005)

32
2.6.1 Paris Convention

The Paris Convention for the Protection of Industrial Property, it was

established in 1883, addresses compulsory licensing in its Article 5A. The provision
of Paris convention allows member states to take measures against the misuse of
patent rights, such as non-exploitation of the patent. It permits the issuance of
compulsory licenses after a certain period if the patent is not being sufficiently
exploited. The process entails first attempting to secure a voluntary license under fair
terms. If this fails, a compulsory license may be granted, but it must be non-exclusive,
intended primarily for the domestic market, and subject to judicial or administrative
scrutiny. The patent holder must receive fair compensation, ensuring a balance
between safeguarding patent rights and promoting the public interest.52

2.6.2 Berne Convention

The Berne Convention for the Protection of Literary and Artistic Works, and it
was established in 1886, includes provisions related to compulsory licensing,
particularly aimed at facilitating access to works in certain circumstances. Article 9(2)
of the Berne Convention allows member states to permit the reproduction of protected
works without the author’s consent under specific conditions. This is especially
relevant for educational and research purposes, translation, and public dissemination
in developing countries. Compulsory licensing under the Berne Convention is
designed to gurantee the exclusive rights of authors do not unduly hinder the
availability of literary and artistic works for the public good.53

The "three-step test," articulated in Article 9(2), provides a framework for

these exceptions and limitations. It requires that the exceptions must be confined to
certain special cases, must not conflict with the normal exploitation of the work, and
must not unreasonably prejudice the legitimate interests of the author. This test
ensures that compulsory licensing mechanisms are carefully controlled and balanced,
allowing for necessary public access while protecting the economic rights and
incentives of creators.

52
The Paris Convention for the Protection of Industrial Property, signed in Paris, France, on March
20, 1883, available at http://www.wipo.int/export/sites/www/treaties/en/ip/paris/pdf/trtdocs_wo020.pdf
(accessed on 05/03/2024).
53
Berne Convention for the Protection of Literary and Artistic Works, 1886, Articles 9(1) and 9(2).

33
2.6.3 The Universal Copyright Convention

The Universal Copyright Convention (UCC), adopted in 1952 and revised in

1971, was established as an alternative to the Berne Convention, particularly by the
United States and the USSR, which rejected Berne's stringent protection standards.
The UCC, spearheaded by UNESCO, aimed to provide international copyright
protection for literary, scientific, and artistic works. Member States must ensure
"appropriate and effective" protection of authors' rights and adhere to the principle of
national treatment. The UCC mandates the use of the © symbol and publication
details, aligning with domestic laws. It also allows for restrictions on rights through
compulsory licensing under Articles V(2), Vter, and Vquater, primarily for translation
and reproduction rights, especially in developing countries. Compulsory licenses
require proof of a denied request for voluntary licensing or inability to locate the
rights owner despite due diligence. Article V(2) permits translation licenses for works
untranslated for seven years, while Articles Vter and Vquater allow similar licenses
for shorter periods in developing countries. The validity of these licenses is subject to
judicial review in each country.54

2.6.4 The Rome Convention

The Rome Convention for the Protection of Performers, Producers of

Phonograms, and Broadcasting Organisations, also known as the International
Convention for the Protection of Performers, Producers of Phonograms, and
Broadcasting Organisations, was adopted by members of the United International
Bureaux for the Protection of Intellectual Property (BIRPI), the predecessor to the
World Intellectual Property Organization, on October 26, 1961. Developed to regulate
the derivative rights of artists, producers, and broadcasting companies in the
entertainment industry, the Rome Convention includes provisions for compulsory
licensing, as mentioned in Article 15, which states that "compulsory licenses may be
provided for only to the extent to which they are compatible with this Convention."
This indicates that while the criteria for issuing such licenses are not specified, the

54
Universal Copyright Convention, adopted in Geneva, Switzerland on September 6, 1952, revised at
Paris on July 24, 1971.

34
concept of compulsory licensing is acknowledged within the field of intellectual
property.55

2.6.5 TRIPS Agreement

The Agreement on Trade-Related Aspects of Intellectual Property Rights

(TRIPS), negotiated after the Uruguay round of the General Agreement on Tariffs and
Trade (GATT) and finalized in 1994, aimed to establish minimum standards for
intellectual property protection among World Trade Organization (WTO) member
countries. It was a response to pressures from developed economies seeking uniform
protection standards across nations to promote stability in international economic
relations. TRIPS negotiations witnessed tension between industrialized countries
advocating for stronger protection and third world nations advocating for more
flexible norms to suit their internal needs. Prior to TRIPS, varying levels of
intellectual property protection existed among member states, leading to practices like
"reverse engineering" in pharmaceutical manufacturing. TRIPS introduced stringent
patent protection requirements under Article 27.1, which led to concerns over access
to essential medicines in developing countries due to increased costs. However,
TRIPS also included provisions recognizing the importance of public health and
allowing member states to adopt measures to address socio-economic development
needs while protecting intellectual property rights. Article 27(2) allows exclusion
from patentability to protect public health, while Article 30 permits limited exceptions
to patent rights. Article 31, titled "Other use without authorization of the right holder,"
addresses compulsory licensing, providing flexibility for developing nations to ensure
access to affordable medicines.56

2.6.5.1 TRIPS Flexibilities

During the negotiations for the TRIPS Agreement, concerns were raised by
developing nations regarding its potential negative impact on their development needs
and public policies. To address these concerns, the TRIPS Agreement included certain
flexibilities aimed at catering to the needs of third world nations. These flexibilities

55
Rome Convention for the Protection of Performers, Producers of Phonograms and Broadcasting
Organisations, 496 U.N.T.S 43, accepted on 26 October 1961.
56
TRIPS Agreement, negotiated after the Uruguay round of the General Agreement on Tariffs and
Trade (GATT) and finalized in 1994.

35
encompass various aspects such as cases when a patent can be refused, transition
periods for Least-Developed Country Members, exceptions to product patents, limited
data protection, authorization of parallel imports, provisions for government use, and
the granting of compulsory licenses to non-patentees. For instance, Article 27(1) of
TRIPS allows member states to refuse patents under certain conditions, providing
flexibility in defining patent eligibility criteria. Transition periods, as outlined in
Article 66, offer relief to Least-Developed Country Members, recognizing their
unique constraints and exempting them from applying certain provisions of the TRIPS
Agreement until January 1, 2016. Article 30 empowers member countries to provide
limited exceptions to patent rights, allowing for flexibility in domestic interpretation.
Article 39.3 obligates governments to protect marketing approval data, but the form of
protection is left to member states' discretion. Parallel imports are authorized under
Article 6, enabling countries to establish their own regimes for exhaustion without
challenge, crucial for addressing varying medication costs across nations.
Government use is permitted under Article 31(b) in cases of national emergencies or
non-commercial usage to benefit the general public. Finally, the Doha Declaration
granted member countries the freedom to determine the grounds for granting
compulsory licenses, addressing the demands of developing nations. These
flexibilities underscore the TRIPS Agreement's recognition of diverse national
circumstances and the importance of balancing intellectual property rights with socio-
economic development goals.57

2.6.6. Doha Declaration

The Doha Declaration mediated between the rights of patent holders and
Member States' rights to safeguard public health. It affirmed that the TRIPS
Agreement does not hinder members from implementing measures to protect public
health and promote access to medicines. Many flexibilities outlined in TRIPS were
reaffirmed by the Doha Declaration, emphasizing the discretion of TRIPS members to
grant compulsory licenses and determine the circumstances for doing so. Paragraph 6
of the Doha Declaration addressed export restrictions imposed by TRIPS Article
31(f), particularly for countries lacking pharmaceutical manufacturing capacities. It

57
Chaudhari, Sudip. "TRIPS and Changes in Pharmaceutical Patent Regime in India." Working Paper,
IIM Calcutta, January 2005, p. 9. Available at: http://www.who.int/hiv/amds/IDA_India-Patent-
amendments-Sudip.pdf. Accessed on 06/03/24.

36
directed the TRIPS Council to find a solution, leading to the proposal of export
compulsory licenses by Ambassador Eduardo Pérez Motta. However, this draft was
not approved due to disagreements over the scope of diseases and eligibility criteria
for importing Members. Consequently, the Doha Declaration Paragraph 6 solution,
enacted on August 30, 2003, allowed exporting countries to issue compulsory licenses
for pharmaceuticals needed by importing Members with insufficient manufacturing
capacities. This waiver was made permanent through an amendment to the TRIPS
Agreement known as Article 31bis, aiming to enhance access to affordable medicines.
Nonetheless, challenges remain, including the determination of adequate
remuneration for patent holders and concerns over bilateral trade agreements
imposing stricter patent laws. Additionally, Paragraph 7 of the Doha Declaration
extended the transition period for least-developed members regarding pharmaceutical
patents until January 1, 2016, without affecting their right to seek further extensions
under Article 66(1) of the TRIPS Agreement.58

2.6.7 The Marrakesh Treaty

The Marrakesh Treaty, adopted by the World Intellectual Property

Organization (WIPO) in 2013, addresses the "book famine" issue by providing
compulsory limitations and exceptions to copyright for the benefit of blind, visually
impaired, and otherwise print-disabled individuals. Its main goal is to promote the full
development and rights of persons with visual impairments or other print disabilities,
ensuring their equal access to education, information, and cultural works. While
emphasizing the importance of copyright, the treaty aims to enhance accessibility to
published literary and artistic works for the specified beneficiary groups. India was
the first country to ratify the treaty, followed by numerous others, including EU
member-states. The treaty mandates Member States to establish standard limitations
and exceptions to copyright laws to facilitate the copying, dissemination, and access
to published works in accessible formats for the beneficiaries. These individuals
include those who are blind, visually impaired, or have other print disabilities that
hinder effective reading. Importantly, the treaty allows for the importation of

58
Gumbel, M. (2008). "Is Article 31 bis Enough? The Need to Promote Economies of Scale in the
International Compulsory Licensing System." 22 TEMP. INT'L & COMP. L.J., 161.

37
accessible versions of works without prior permission from the copyright owner for
the benefit of these individuals.59

2.6.8 Free Trade Agreements

Several bilateral trade agreements have been established, particularly with

countries in Latin America and Asia, notably India, covering various products
including pharmaceuticals. These agreements prioritize strengthening intellectual
property rights protection, particularly for high-cost brand name medicines, while
imposing restrictions on the trade of affordable generic medicines. Despite being
positioned as assistance to countries affected by economic crises, these agreements
have significant adverse effects on public health. Both the United States and the
European Union advocate for stringent intellectual property protections, severely
limiting the ability of drug producers in India and other developing nations to produce
and distribute life-saving, lower-cost generic medications. Many of these agreements
include 'TRIPS-Plus' clauses, surpassing the provisions of the WTO TRIPS
Agreement and contradicting the principles of the 2001 Doha Declaration on TRIPS
and Public Health. Free Trade Agreements (FTAs) aim to restrict compulsory
licensing by imposing bilateral limits on compulsory licensing laws or imposing
additional requirements for issuing compulsory licenses. For instance, FTAs between
the United States and countries like Jordan, Singapore, and Australia regulate the
conditions for granting compulsory licenses. Moreover, these agreements restrict the
use of compulsory licensing in cases where functional conditions cannot be met.
Additionally, some FTAs stipulate that during a national emergency, the state utilizing
a compulsory license may not request technical know-how from the patentee, further
complicating the appropriate use of compulsory licenses for selling generic products
due to the patentee's exclusivity over relevant data.60

59
World Intellectual Property Organization. "The Marrakesh Treaty to Facilitate Access to Published
Works for Persons Who Are Blind, Visually Impaired or Otherwise Print Disabled." June 27, 2013
60
Morin, J.-F. (2006). Tripping up TRIPS debates IP and health in bilateral agreements. International
Journal of Intellectual Property Management, 1(1/2), 37-53.

38
2.6.9 The Anti-Counterfeiting Trade Agreement

The Anti-Counterfeiting Trade Agreement (ACTA) is a proposed international

treaty negotiated by several developed nations, aimed at establishing global standards
for the strict enforcement of intellectual property rights. Currently signed by nine
countries and the European Union, along with its member states, and ratified by
Japan, ACTA seeks to combat counterfeiting, generic medicines, and online copyright
infringement. It proposes the creation of an independent regulatory authority separate
from the World Trade Organization, World Intellectual Property Organization, and
United Nations. However, concerns have been raised that the existing version of the
agreement could hinder generic innovation and limit access to pharmaceuticals in
underdeveloped nations. While ACTA intends to combat counterfeit medicines by
allowing governments and companies to take aggressive legal action, there are fears
that this could delay access to legitimate generic drugs. As per the current terms,
global pharmaceutical companies could request customs officials in exporting,
transiting, and importing nations to seize lawful generic medications under the pretext
of potential counterfeit products. The EU, in particular, advocates for customs
officials to be empowered to seize medicines for patent infringement, even if the
patent status does not indicate counterfeiting. ACTA is seen as discouraging the
production and trade of generic medicines, as it imposes severe penalties, shifts risks
onto generic manufacturers, and offers limited safeguards against abuse. French EP
member Kader Arif has criticized ACTA for treating generic drugs the same as
counterfeited drugs, thereby potentially obstructing access to affordable medicines in
developing countries. Arif argues that generic medicines are not counterfeit but rather
legitimate versions of patented drugs, often sought by countries for public health
policies. He warns that ACTA could restrict countries like India from making
independent medical choices, potentially affecting compulsory licensing for drug
exports. Instances of multinational drug companies seizing generic drugs in transit
have already been reported, raising concerns about the potential negative impact of
ACTA on underdeveloped nations.61

61
von Reppert-Bismarck, Juliane. "EU, India resolve trade dispute over generic drugs." Reuters, Dec
10, 2010. Available at: http://in.reuters.com/article/2010/12/10/idINIndia-53487720101210.

39
2.7 CONCLUSION

The conclusion drawn from the above analysis is that while intellectual
property laws aim to reward creators and incentivize innovation, they must also serve
the broader interests of society. Compulsory licensing provisions exist to ensure that
the public's access to essential inventions is not unduly restricted by private interests.
In the context of patents, compulsory licensing acts as a deterrent against patent
holders who fail to fulfill their obligations or engage in practices that harm public
welfare, such as monopolizing markets or inflating prices. While international
agreements provide flexibilities for developing countries to enact their own
intellectual property laws, there are challenges in effectively utilizing these provisions
due to the threat of sanctions and pressure from developed nations. Moreover, TRIPS-
Plus requirements pose additional obstacles to the implementation of compulsory
licensing and can undermine the public health objectives that such measures are
intended to address. Overall, there is a need for international agreements to safeguard
the interests of public health in developing countries and ensure that compulsory
licensing provisions are not undermined by economic interests.

40
 CHAPTER 3

COMPULSORY LICENSING UNDER INDIAN LAWS

3.1 Introduction

Internationally, compulsory licensing stands as a pivotal measure in

guaranteeing the availability of critical technologies and medicines, especially within
developing nations. Its primary function is to find an equilibrium between the rights
of intellectual property holders and the broader public interest. These provisions are
frequently integrated into global agreements to tackle public health challenges and
foster innovation, all while curbing monopolistic behaviors that might impede access
to essential goods and technologies. Despite its noble intentions, the execution of
compulsory licensing often encounters hurdles, ranging from pressure exerted by
more developed nations to apprehensions regarding trade partnerships and
investments.62

Compulsory licensing assumes a significant role on the global stage, primarily

within the context of ensuring accessibility to indispensable technologies and
pharmaceuticals, particularly in regions grappling with economic development. It
operates as a mechanism aimed at harmonizing the needs of the intellectual property
rights holders with the broader welfare of the populace. Such provisions are regularly
enshrined within international accords to address pressing public health issues and
foster an environment conducive to innovation, all while mitigating the risks posed by
monopolistic practices that could obstruct access to essential resources. However, the
effective implementation of compulsory licensing encounters a myriad of challenges,
including diplomatic pressures from more affluent nations and apprehensions
surrounding potential impacts on trade relationships and investment landscapes.63

62
Government of India, Report on the Revision of the Patents Laws by Shri Justice N. Rajagopala
Ayyangar (The Ministry for Commerce and Industry, September 1959), para. 125-167. See Chapter 2,
page 25.
63
Hauroo, P. "Copyright Issues for Libraries in Mauritius," available at
liamofmauritius.files.wordpress.com/.../copyright-issues-for-libraries-in-mauritius.pdf, visited on
March 22, 2024.

41
3.2 Integrating the flexibilities outlined in the TRIPS agreement into the Patents
Act of 1970.

The incorporation of compulsory licensing rules into India's Patents Act of the
1970 stemmed from recommendations made by the Ayyangar Committee. The
committee proposed compulsory licensing as a solution to patent abuse, aiming to
enhance public access to patented drugs in India. The Act aimed to diminish the
hegemonic control of multinational corporations (MNCs) and remove obstacles for
local firms in manufacturing patented drugs previously protected by product patents.
With India joining the WTO in 1995, it promptly became a party to the TRIPS
Agreement, leading to three amendments to the 1970 Act to align with TRIPS
standards, including recognition of product patents. Although this shift raised
concerns about access to innovative technologies and patented drugs, compulsory
licensing provisions served to balance public welfare with patentee monopolistic
rights. Chapter XVI of the Act outlines the applicable compulsory licensing system,
leveraging TRIPS flexibilities to meet the needs of developing nations. While
previous chapters delved into TRIPS flexibilities, this section evaluates India's efforts
in mitigating the adverse impacts of product patents by integrating these flexibilities
into its legislation.64

3.2.1 Exemptions from grant of patent

The Patents Act of 1970, particularly in Chapter II (Sections 3 to 5), deals with
"inventions not patentable." Section 3 specifies what does not qualify as inventions
under the Act. Amendment by the 2005 Amendment Act introduced Section 3(d) to
prevent the granting of patents for trivial modifications of existing innovations,
thereby aiming to discourage multinational corporations from extending patent
monopolies through what is termed "evergreening." A recent decision by the Supreme
Court involved the denial of patent protection for Novartis' drug Gleevec (Imatinib
Mesylate in Beta Crystalline form). The court reasoned that imatinib mesylate is
already known from the Zimmermann patent and extensively documented in
academic literature regarding its pharmacological properties. While the beta
crystalline form of imatinib mesylate showed improved physical efficacy with 30%

64
Ayyangar Committee, Report on the Revision of the Patents Laws by Shri Justice N. Rajagopala
Ayyangar, The Ministry for Commerce and Industry, September 1959.

42
higher bioavailability compared to its free base form, the court highlighted the
absence of evidence demonstrating its superior therapeutic efficacy at a molecular
level over the free base form in animal models. Consequently, the beta crystalline
form of imatinib mesylate did not meet the criteria for patentability under Section 3(d)
of the Patents Act, 1970.65

3.2.2 Exceptions to rights granted by product patents

Exceptions to product patent rights are outlined in Section 107A(b) of the

Patents Act, which stipulates that the importation of patented products from an
authorized distributor by any individual does not constitute patent infringement.
While this provision facilitates imports, potential delays may arise due to the
requirement of being "duly authorised by the patentee." Additionally, Section 47 of
the Patents Act provides further exceptions to product patents, permitting the use of
patented products for experimental or research purposes, including educational
dissemination. Moreover, Section 47(4) empowers the government to import patented
medicines for official use or distribute them through designated facilities such as
dispensaries or hospitals, as specified in the Official Gazette. These provisions
contribute to a nuanced framework balancing patent rights with broader public
interests. 66

3.2.3 Limited data protection:

The absence of provisions for test data confidentiality in the amendments

made to the Patents Act of 1970, aimed at ensuring compliance with TRIPS, reflects a
lack of data protection measures in India. This absence has allowed India to leverage
the considerable flexibility provided by TRIPS, resulting in positive effects on the
competitiveness and pricing of generic pharmaceuticals. However, there has been
significant pressure from Multinational Corporations (MNCs) and the US government
for India to enact data exclusivity legislation.

65
The Patents Act 1970, Section 3(d).
66
Chaudhari, Sudip. "TRIPS and Changes in Pharmaceutical Patent Regime in India." Working Paper,
IIM Calcutta, January 2005, pp. 9-17. Available at: http://www.who.int/hiv/amds/IDA_India-Patent-
amendments-Sudip.pdf (accessed on 05/03/2024).

43
3.3 Grounds for Compulsory Licensing

Compulsory licensing can be granted on various grounds, depending on the legal

framework of each country. However, some common grounds for granting
compulsory licenses include:

(i) Abuse of Patent Rights (Section 84)

(ii) Licensing of Related Patents (Section 91)

(iii)Public Interest ( Section 92)

(iv) Compulsory Licence for Export of Pharmaceuticals (Section 92A)

These are just some of the grounds on which compulsory licenses may be granted,
and the specific criteria and procedures vary from country to country.

3.3.1 Abuse of Patents Rights

Section 84 of the Indian Patents Act, 1970, it is a crucial legal provision

designed to mitigate the abuse and of patent right and ensure that patents serve their
intended purpose of promoting public welfare. This section permits for the granting of
compulsory licenses under specific conditions, ensuring that patented inventions are
accessible and affordable to the public. This document provides a comprehensive
analysis of Section 84, detailing on the grounds for compulsory licensing, the
application process thus, the broader implications for patent rights and public welfare
in India.67

3.3.1.(i) Grounds for Compulsory Licensing

Section 84(1) outlines three primary grounds upon which an interested party may
apply for a compulsory license three years after the grant date of the patent:

A) Non-Working of the Patent (Section 84(1)(a))

The primary reason for granting a compulsory license is when the patented
invention does not adequately meet the public's reasonable needs. This occurs
when the patent holder does not sufficiently utilize the patent to meet societal
demand. The goal is to ensure that patents are not just nominal legal rights but
are actively used to contribute to societal welfare.

67
The Patents Act, 1970 (India).

44
 B) Non-Availability at Reasonable Price (Section 84(1)(b))
The second reason for granting a compulsory license is when the patented
invention is not accessible to the public at a reasonably affordable cost. This
provision targets the problem of high pricing of patented products, especially in
critical areas such as healthcare, where affordability is paramount. Through the
implementation of compulsory licensing, the legislation seeks to enhance
accessibility of essential goods for the broader population.
C) Failure to Work in India (Section 84(1)(c))
The third basis involves the inadequate utilization of the patented invention in
India. This indicates that either the patented product is not being manufactured or
the patented process is not being implemented to a satisfactory degree within the
country. This provision encourages local production and reduces dependency on
imports, promoting self-sufficiency and local industry development.68

(ii) Application Process for Compulsory Licensing

The process for applying for a compulsory license involves several steps to ensure
fairness and transparency:

A) Filing an application
An interested person or entity, which can include any individual, company,
or government body, must file or request for the application to the Controller
of Patents. The application should detail the grounds on which the compulsory
license is sought and provide evidence supporting the claims of non-working,
unavailability, or unreasonable pricing.69
B) Notification and Opposition
Upon receiving the application, the Controller of Patents notifies the
patentee, who is given an opportunity to oppose the application. The patentee
can present evidence and arguments to refute the claims made in the
application. This step ensures that the patentee has a fair chance to defend
their patent rights.70
C) Hearing and Decision

68
The Patents Act, 1970, § 84(1).
69
The Patents Act, 1970, § 84(3).
70
The Patents Act, 1970, § 84(4).

45
 The Controller conducts a hearing where both parties can present their cases.
After considering all evidence and arguments, the Controller decides whether
to grant the compulsory license. If granted, the Controller also determines the
terms and conditions of the license, including the royalty to be paid to the
patentee. This decision-making process is critical to balancing the interests of
the public and the patentee.71

(iii) Implications of Section 84

Section 84 has significant implications for the patent landscape in India,

influencing how patents are managed and enforced.

A) Promoting Public Welfare

By enabling compulsory licensing, Section 84 ensures that patented inventions
are available to the public, particularly in sectors where accessibility and
affordability are critical. This provision aligns with the broader objective of
patent law, which is to promote innovation while ensuring that the benefits of
such innovation are widely distributed.72
B) Encouraging Local Manufacturing
The requirement for sufficient working of patents within India encourages
local manufacturing and reduces dependency on imports. This provision
supports the development of local industries and enhances the country’s self-
sufficiency in critical sectors.
C) Balancing Patentee and Public Interests
Compulsory licensing serves as a check against the misuse of patent rights,
ensuring that patents do not become tools for monopolistic practices that harm
public interests. By balancing the rights balancing the interests of patent
holders with the requirements of the public, Section 84 fosters a more
equitable and just patent system.
D) Impact on Pharmaceutical Sector

71
The Patents Act, 1970, § 84(5).
72
Basheer, S. (2005). "Compulsory Licensing in India: A Myth Exploded". Journal of Intellectual
Property Rights, 10, 323-335.

46
 The pharmaceutical sector is particularly affected by Section 84, as it
addresses the high costs of patented medicines and ensures their availability at
reasonable prices. This provision is vital for public health, ensuring that
essential medications are available to those in need them most.73

(iv) Challenges and Considerations

While Section 84 provides a robust framework for addressing the abuse of patent
rights, its implementation faces several challenges:

A) Determining Reasonable Pricing

One of the key challenges is determining what constitutes a “reasonably
affordable price.” This assessment can be subjective and varies depending on
the economic conditions and purchasing power of the public. The Controller
must consider various factors, including the cost of production, market prices,
and the socio-economic context.74
B) Balancing Incentives and Access
While compulsory licensing promotes public access, it must be carefully
balanced to ensure that it does not undermine the incentives for innovation.
Patentees invest significant resources in research and development, and their
ability to recoup these investments through exclusive rights is crucial for
continued innovation.
C) International Pressure
India’s use of compulsory licensing has faced criticism and pressure from
multinational corporations and developed countries, especially the United
States, contend that compulsory licensing undermines the patent system and
deters investment in research and development efforts. Balancing domestic
needs with international relations remains a delicate task.75
D) Administrative Challenges

73
Chaudhuri, S. (2005). "TRIPS and Changes in Pharmaceutical Patent Regime in India". Working
Paper, IIM Calcutta, p. 9.

74
Gopakumar, K. M. (2010). "Compulsory Licensing: For the Common Good". Economic and
Political Weekly, 45(22), 15-18.
75
Government of India. (1959). "Report on the Revision of the Patents Laws by Shri Justice N.
Rajagopala Ayyangar". The Ministry for Commerce and Industry, September 1959, para. 125-167.

47
 The process of granting compulsory licenses involves detailed administrative
procedures, which can be time-consuming and complex. Ensuring that these
processes are efficient and transparent is essential for the effective
implementation of the Section 84.76

The Section 84 of the Patents Act, 1970, is a vital legal provision that
addresses the misuse of patent privileges via compulsory licensing. Through
providing measures to ensure that patents are utilized for the public's benefit and are
available at reasonable prices, this section promotes public welfare and supports the
development of local industries. While the implementation of compulsory licensing
poses challenges, including determining reasonable pricing and balancing incentives
with access, it remains a crucial tool for fostering a more equitable patent system in
India. The provision ensures that the benefits of innovation are widely distributed,
aligning with the broader objectives of patent law and public interest.77

3.3.2 Licensing of Related Patents

The Patents Act of 1970 includes provisions to ensure that the rights conferred
by patents do not unduly limit competition or hinder the dissemination of
technological advancements. Section 91 specifically addresses the licensing of related
patents, aiming to facilitate the practical exploitation of inventions that are
interdependent.78

Section 91 of the Patents Act, 1970, outlines provisions for licensing related
patents, specifically when the practical implementation of one patent (referred to as
the "first patent") requires the utilization of another patent (referred to as the "second
patent"). This provision is crucial for enabling the implementation of complex
technologies that often rely on multiple patents held by different entities.79

76
Novartis AG v. Union of India & Others, Civil Appeal Nos. 2706-2716 OF 2013 (decided on April 1,
2013).
77
The Patents Act, 1970, § 84.
78
Dutton, Harold I., The Patent System and Inventive Activity During the Industrial Revolution 1750-
1852, Manchester University Press, 1984.
79
Licensing of Related Patents under the Patents Act, 1970

48
3.3.2(i) Objectives of Section 91

The primary objectives of Section 91 include:

A) Preventing Monopoly Abuse:

Ensuring that patent holders do not unfairly exploit their rights to maintain a
monopoly, particularly when their patent is essential for the operation of
another patented invention.
B) Promoting Innovation:
Facilitating the practical application of technological advancements by
allowing access to necessary patents, thus encouraging further innovation.
C) Balancing Interests: Balancing the rights of patent holders with the public
interest involves ensuring patents do not stifle technological development and
competition.80

(ii) Criteria for Licensing Under Section 91

To invoke the provisions of Section 91, the following criteria must be met:

A) Dependency of Patents:
There must be a clear dependency between the first and second patents,
meaning the first patent cannot be implemented without potentially violating
the second patent.
B) Non-Adequate Terms:
The holder of the first patent must have attempted to obtain a license from the
owner of the second patent under fair conditions and conditions but has not
been able to secure such a license.
C) Reasonable needs of the public:
The licensing of the second patent must fulfil the legitimate needs of the
public concerning to the working of the first patent.81

80
Netanel, Neil W., Copyright's Paradox, Oxford University Press, 2008.

81
Hettinger, Edwin C., Justifying Intellectual Property, Philosophy and Public Affairs, Vol. 18, No. 1,
1989.

49
(iii)Licensing Procedure

The procedure for obtaining a license under Section 91 involves:

A) Application:
The owner of the first patent is required to submit an application to the
Controller of Patents, providing details of the dependency and the failed
attempts to obtain a license.
B) Evaluation:
The Controller evaluates the application to determine whether the criteria for
dependency and public interest are satisfied.
C) Granting of License:
If the Controller is convinced, a license is granted on terms that are
considered fair and reasonable, balancing the interests of both patent holders.82

(iv) Implications of Licensing Under Section 91

The implications of licensing related patents under Section 91 are significant:

A) Encouragement of Collaborative Innovation:

By facilitating access to necessary patents, Section 91 encourages
collaboration among inventors and companies, leading to more integrated and
advanced technological solutions.
B) Reduction of Litigation:
By providing a clear mechanism for resolving patent dependency issues,
Section 91 can reduce the need for litigation between patent holders, saving
time and resources.
C) Economic Impact:
Facilitating the practical use of related patents can boost economic activity by
enabling the manufacturing and marketing of intricate products and services.83

82
Posner, Richard A., Economic Analysis of Law, 9th ed., Wolters Kluwer, 2014.
83
Dutton, Harold I., The Patent System and Inventive Activity During the Industrial Revolution 1750-
1852, Manchester University Press, 1984.

50
(v) Limitations and Challenges

Despite its benefits, Section 91 faces certain limitations and challenges:

A) Subjectivity in Determination:
The criteria for determining dependency and public interest can be subjective,
leading to potential disputes.
B) Administrative Burden:
The process of applying for and evaluating licenses can be time-consuming
and may place an administrative burden on the patent office.
C) Resistance from Patent Holders:
Patent holders may resist compulsory licensing, viewing it as an infringement
on their rights, leading to potential legal challenges.84

Section 91 of the Patents Act, 1970, plays a crucial role in ensuring that patent
rights do not hinder technological progress and competition. By establishing a
framework for licensing related patents, it facilitates a balance between the interests
of patent holders and the public, thereby fostering innovation and economic growth.
However, the effective implementation of this provision requires careful consideration
of the criteria for dependency and public interest, as well as efficient administrative
processes.85

3.3.3 Public Interest (Section 92)

Section 92 of the Indian Patents Act, 1970, deals with the grant of compulsory
licenses in cases concerning public interest. This provision empowers the government
to permit the utilization of a patented invention without the consent of the patent
holder under the certain circumstances. This mechanism is crucial for ensuring that
essential goods and technologies are available to the public, especially during
emergencies or when public welfare is at stake.86

84
Cornish, W.R., Intellectual Property: Patents, Copyright, Trademarks and Allied Rights, 5th ed.,
Sweet & Maxwell, 2003.
85
Bentley, Lionel & Sherman, Brad, Intellectual Property Law, 4th ed., Oxford University Press, 2014.
86
Gallini, Nancy T., and Suzanne Scotchmer. "Intellectual Property: When Is It the Best Incentive
System?" Innovation Policy and the Economy, vol. 2, no. 1, 2002, pp. 51-78.

51
3.3.3(i) Public Interest and Compulsory Licensing

Public interest is a broad concept that encompasses various aspects of societal

welfare, including public health, safety, and economic well-being. Compulsory
licensing under Section 92 is a tool to balance the monopolistic rights of patent
holders with the need to make vital products accessible to the public. This section
empowers the government to intervene and issue licenses for the manufacturing and
distribution of patented products, particularly in cases where the public interest
outweighs the exclusive rights of the patent holder.87

(ii) Grounds for Compulsory Licensing in Public Interest

Section 92 stipulates several grounds on which compulsory licenses can be issued:

A) National Emergency:
In times of national emergency, such as during wars or natural disasters, the
government can issue compulsory licenses to ensure the availability of
necessary goods and services. This ensures that the country can respond
effectively to crises without being hindered by patent restrictions.
B) Extreme Urgency:
Circumstances of extreme urgency, which may not qualify as national
emergencies but still require immediate action, also justify the issuance of
compulsory licenses. For instance, sudden outbreaks of diseases that
necessitate the rapid deployment of medications and vaccines can trigger the
application of Section 92.
C) Public Non-Commercial Use:
When the government or its agencies need to use a patented invention for
public non-commercial purposes, such as public health programs or
educational initiatives, compulsory licenses can be granted. This provision
ensures that public welfare projects are not obstructed by patent barriers.88

87
Boldrin, Michele, and David K. Levine. Against Intellectual Monopoly. Cambridge University Press,
2010

88
Rai, Arti Kaur. Patent Pledges: Global Perspectives on Patent Law's Private Ordering Frontier.
Cambridge University Press, 2017.

52
(iii) Procedure for Issuance

The procedure for issuing compulsory licenses under Section 92 involves several
steps to ensure that the process is transparent and justified:

A) Declaration by the Government:

The Central Government must declare a national emergency, extreme
urgency, or public non-commercial use situation through an official
notification. This declaration is the basis for initiating the process of
compulsory licensing.
B) Application and Terms:
The government or its authorized entity must apply for a compulsory license,
specifying the terms and conditions under which the license will be issued.
These terms are subject to scrutiny to ensure they are fair and reasonable.
C) Remuneration to the Patentee:
The patentee is entitled to adequate remuneration for the use of their patented
invention. The amount of remuneration is determined by considering the
economic value of the authorization and the circumstances of the case.89

(iv) Impact on Innovation and Access

The provision for compulsory licensing in public interest is designed to strike

a balance between encouraging innovation and ensuring access to essential goods and
technologies. While patent rights incentivize innovation by granting exclusive rights
to inventors, these rights can sometimes lead to high prices and limited availability of
critical products. Section 92 addresses this issue by allowing the government to
override patent rights in the interest of public welfare.90

(v) International Perspective

The concept of compulsory licensing in public interest is not unique to India;

it is recognized internationally under agreements such as the TRIPS Agreement

89
Drahos, Peter, and John Braithwaite. Information Feudalism: Who Owns the Knowledge Economy?
New Press, 2002.
90
Dutfield, Graham. Intellectual Property Rights and the Life Science Industries: A Twentieth
Century History. Ashgate Publishing, 2003.

53
(Trade-Related Aspects of Intellectual Property Rights). TRIPS provides flexibility for
member countries to issue compulsory licenses to protect public health and ensure
access to medicines. India’s implementation of Section 92 aligns with these
international provisions, reinforcing the country’s commitment to public health and
welfare.91

(vi) Challenges and Criticisms

Despite its importance, the use of compulsory licensing under Section 92 faces
several challenges and criticisms:

A) International Pressure:
Developing countries like India often face pressure from developed nations
and multinational corporations to limit the use of compulsory licenses. These
entities argue that frequent use of compulsory licensing can discourage
investment and innovation.

B) Economic Considerations:
Determining fair remuneration for patentees can be complex, involving
economic and legal considerations. Striking the right balance between
compensating patent holders and making products affordable for the public is
a delicate task.92
C) Implementation Hurdles:
The process of issuing compulsory licenses involves bureaucratic procedures
that can delay the availability of essential products. Ensuring that the process
is swift and efficient is crucial for addressing urgent public interest needs.93

Section 92 of the Indian Patents Act, 1970, plays a vital role in safeguarding
public interest by enabling the government to issue compulsory licenses for patented
inventions. This provision ensures that essential goods and technologies are accessible

91
Merges, Robert P., and Richard R. Nelson. "On the Complex Economics of Patent Scope." Columbia
Law Review, vol. 90, no. 4, 1990, pp. 839-916.
92
Hahn, Robert W., and Scott Wallsten. "The Economics of Open Access Journals." Information
Economics and Policy, vol. 20, no. 2, 2008, pp. 174-189.

93
Calboli, Irene, and Edward Lee. Research Handbook on Intellectual Property in Media and
Entertainment. Edward Elgar Publishing, 2016.

54
during emergencies, extreme urgency, and for public non-commercial use. While the
mechanism is crucial for public welfare, it must be implemented judiciously to
balance the interests of patent holders and the public. The international recognition of
compulsory licensing under agreements like TRIPS underscores its significance in
promoting global health and welfare.94

3.4 compulsory licensing under copyright Act, 1957

In India, the concept of compulsory licensing under copyright law serves as a

mechanism to balance the interests of copyright holders with the broader public
interest in accessing and utilizing copyrighted works. The Indian Copyright Act, 1957,
lays down provisions for the issuance of compulsory licenses, outlining circumstances
under which copyrighted works can be used without the explicit permission of the
copyright owner. This provision is crucial for promoting access to knowledge,
encouraging creativity, and fostering innovation while upholding the rights of creators
and copyright owners. Section 31 of the Indian Copyright Act, 1957, delineates the
framework for compulsory licensing. It empowers the Copyright Board to grant
licenses for the use of copyrighted works in specific situations outlined in the Act.
These situations include instances where copyrighted works are not readily available
to the public at a reasonable price or are withheld by the copyright owner, thereby
impeding public access to such works. The overarching objective is to ensure
equitable access to copyrighted materials for the benefit of society.95

3.4.1 Grounds for Issuance of Compulsory Licenses

One of the primary grounds for the issuance of compulsory licenses is the
unavailability of copyrighted works to the public. This may occur when copyright
holders choose to withhold their works or charge exorbitant prices, thereby restricting
access to essential knowledge and cultural resources. In such cases, the Copyright
Board may intervene to grant compulsory licenses, enabling the public to utilize these
works for various purposes, including education, research, and cultural enrichment.96

94
World Trade Organization (WTO) Agreement on Trade-Related Aspects of Intellectual Property
Rights (TRIPS Agreement).
95
VK Ahuja, Law Of Copyright And Neighbouring Rights National And International Perspectives,
Lexis Nexis, New Delhi, 2015, p. 209.
96
Gervais, D. (2010). The TRIPS agreement: Drafting history and analysis (Vol. 1). Sweet &
Maxwell.

55
3.4.2 Balancing Copyright Holders' Rights and Public Interest

Compulsory licensing provisions aim to strike a delicate balance between the

exclusive rights of copyright holders and the broader public interest. While copyright
law seeks to incentivize creativity and protect the rights of creators, it also recognizes
the need to promote access to knowledge and foster innovation. Compulsory licenses
serve as a tool for achieving this balance by ensuring that copyrighted works are not
unduly withheld or monopolized to the detriment of public welfare.97

3.4.3 Scope of Compulsory Licensing

Compulsory licensing under copyright law encompasses various scenarios

where access to copyrighted works is essential for advancing societal goals. For
example, educational institutions may require access to copyrighted textbooks and
instructional materials to facilitate learning and knowledge dissemination. Similarly,
researchers and scientists may need access to copyrighted literature and data for
conducting scientific studies and experiments.98

3.4.4. Procedure for Obtaining Compulsory Licenses

The process of obtaining a compulsory license involves filing an application

before the Copyright Board, outlining the grounds for seeking the license and
providing relevant details about the copyrighted work in question. The Copyright
Board evaluates the merits of the application, taking into account factors such as the
availability of the work, the reasonableness of the proposed use, and the potential
impact on the copyright owner's interests.99

3.4.5 Limitations and Safeguards

While compulsory licensing provisions provide a mechanism for accessing

copyrighted works, they are subject to certain limitations and safeguards to prevent

97
Samuelson, P. (1994). Copyright's fair use doctrine and digital data. Law and Contemporary
Problems, 111-144.
98
Crews, K. D. (2010). Copyright law for librarians and educators: Creative strategies and practical
solutions. American Library Association.
99
Fisher, W. W. (2004). Promises to keep: Technology, law, and the future of entertainment. Stanford
University Press.

56
abuse and protect the rights of copyright owners. For instance, compulsory licenses
are typically granted on a non-exclusive basis, meaning that multiple parties may be
authorized to use the same copyrighted work under separate licenses. Additionally,
copyright owners are entitled to receive reasonable compensation for the use of their
works under compulsory licenses, ensuring that their rights are adequately
protected.100

3.4.6 Promoting Access to Knowledge and Culture

Compulsory licensing under copyright law plays a vital role in promoting

access to knowledge, fostering cultural exchange, and advancing societal progress. By
facilitating the dissemination of copyrighted works for educational, research, and
other public interest purposes, compulsory licenses contribute to the enrichment of
society and the advancement of human knowledge. Moreover, they encourage the
creation of derivative works, adaptations, and transformative uses that further enhance
the cultural landscape and promote creativity.101

Compulsory licensing under copyright law in India serves as a cornerstone of

the legal framework for promoting access to knowledge, fostering innovation, and
safeguarding public interest. By providing a mechanism for accessing copyrighted
works in specific circumstances where public welfare is at stake, compulsory licenses
strike a delicate balance between the rights of copyright holders and the broader
societal objectives of education, research, and cultural enrichment. As India continues
to evolve its copyright regime to meet the evolving needs of society, compulsory
licensing will remain a vital tool for ensuring equitable access to copyrighted works
and fostering a vibrant cultural ecosystem.102

3.5 Compulsory licenses under The Protection of Plant Varieties and Farmers'
Rights Act, 2001

Compulsory licenses under The Protection of Plant Varieties and Farmers'

Rights Act, 2001, aim to ensure access to plant varieties for specific purposes while

100
Seville, C. J. (2007). The internationalization of copyright: Principles and practice in the digital
era. Oxford University Press.
101
Litman, J. (2006). Digital copyright. Prometheus Books.
102
Nimmer, M. B. (1978). Nimmer on copyright: A treatise on the law of literary, musical and artistic
property, and the protection of ideas (Vol. 1). Clark Boardman Company.

57
protecting the rights of farmers. The Protection of Plant Varieties and Farmers' Rights
Act, 2001 (PPVFR Act) introduces provisions for compulsory licensing to balance the
interests of plant breeders and farmers. Section 41 of the Act delineates the grounds
for granting compulsory licenses, which include cases where a protected variety is not
available to the public at a reasonable price, or where its availability has been unduly
hampered by the breeder. This provision safeguards farmers' access to plant varieties
for cultivation and ensures that breeders do not unfairly restrict access to essential
genetic resources.103

Under Section 42 of the PPVFR Act, any person may apply for a compulsory
license after three years from the date of grant of protection for a plant variety. The
application must be made to the Protection of Plant Varieties and Farmers' Rights
Authority (PPVFRA) and should include relevant details regarding the grounds for
seeking the license. Upon receiving an application, the PPVFRA will examine the
circumstances and may grant a compulsory license if it deems fit to do so in the public
interest.104

Compulsory licenses granted under the PPVFR Act allow the licensee to
produce, sell, and distribute the protected plant variety for the specified purpose
outlined in the license. However, the Act also ensures that the rights of the breeder are
adequately protected, and licensees are required to pay reasonable compensation to
the breeder for the use of the protected variety. Overall, the compulsory licensing
provisions in the PPVFR Act serve as a mechanism to promote equitable access to
plant varieties while safeguarding the interests of both breeders and farmers.105

103
Sushruth Sunder, "India economic survey 2018: Farmers gain as agriculture mechanisation speeds
up, but more R&D needed". The Financial Express. 29 January 2018. Available at
https://www.financialexpress.com/budget/india-economic-survey-2018-for-farmers-agriculturegdp-
msp/1034266/. Accessed on 08/04/2024.
104
NAAS, "Harmonization of seed regulations for sustainable food security in India." Policy Brief No.
10, 2020, New Delhi, p. 4.
105
"India has the highest net cropland area, ahead of China and the United States – study". Available
at https://www.indoasiancommodities.com/2017/11/16/india-highest-net-cropland-area-aheadchina-
united-states-study/. Accessed on 08/04/2024.

58
3.6 CONCLUSION

The Indian Patents Act offers a comprehensive framework for compulsory

licenses, yet only a few companies have utilized this provision despite adequate
safeguards against patent misuse. This suggests that the Act incorporates robust
mechanisms in line with TRIPS Agreement and Doha Declaration flexibilities. Export
compulsory licenses, particularly beneficial for developing nations like India, uphold
its role as the "pharmacy of the poor." The catastrophic approach for royalty
determination seems most suitable for India, ensuring affordability of pharmaceutical
patents. The Act's condition of local working holds promise in making essential
medicines accessible at reasonable costs. However, there's a need for government
encouragement for companies to apply for compulsory licenses in cases of patent
abuse, serving as a deterrent to multinationals engaging in such practices.

The Copyright Act of 1957 also provides a robust framework for compulsory
licensing to promote knowledge dissemination and the arts. In third-world countries,
including India, ensuring affordable access to education and cultural works remains a
challenge due to prohibitive costs. Compulsory licenses can address this issue by
making intellectual goods more accessible and curbing piracy. Moreover, compulsory
licensing in copyright can streamline the licensing process for music and sound
recordings, preserve manuscripts, and enhance accessibility for visually impaired
individuals through accessible format conversions. Given India's diverse agricultural
landscape, compulsory licensing could also spur innovation in the agriculture sector to
address climate-related challenges such as droughts and floods.

59
 CHAPTER 4

Analysing Compulsory Licensing Cases in India: A Judicial Context

4.1 INTRODUCTION

The concept of compulsory licensing, as observed in various international

treaties and conventions, finds detailed provisions in Indian intellectual property laws
such as the laws governing intellectual property in India include the Copyright Act of
1957, the Patents Act of 1970, and the Protection of Plant Varieties and Farmers'
Rights Act of 2001. Despite similar provisions existing in legislation worldwide, there
have been surprisingly few applications for compulsory licenses granted, especially in
India. The country, grappling with accessibility to essential drugs, particularly since
the 2005 amendment, has seen the cost of medicines tied directly to patent policies. In
response, the Indian Patent Act, along with international agreements and conventions,
includes provisions for compulsory licensing of patents, not only in healthcare but
also in ensuring access to cultural and scientific progress. Intellectual property laws,
while intended to incentivize creators and protect their work, can sometimes impede
broader societal expectations. To address this, detailed provisions for compulsory
licenses are made to advance public welfare. This chapter aims to delve into
compulsory license cases filed in India over the past decade and assess their
outcomes, shedding light on the extent of India's utilization of compulsory license
provisions in the Patents Act to facilitate access to affordable medicines and in the
Copyright Act to curb anticompetitive practices. Despite the rarity of instances
involving compulsory licenses, they serve as crucial case studies for this examination.

4.2 NATCO VS BAYER106

India's quest for affordable medication reached a significant milestone on
March 9, 2012, when the Indian Patent Office, under the leadership of In a landmark
decision, Controller General of Patents P.H. Kurian granted Natco Pharma Ltd.,
headquartered in Hyderabad, its first-ever Compulsory Licence. This unprecedented
move authorized Natco Pharma to manufacture a generic version of Bayer

106
Natco v. Bayer C.L.A. No. 1 of 2011 (decided on Mar 9, 2012 by the Controller General of Patents)
2

60
Corporation's patented drug, Nexavar (Sorafenib Tosylate), used for treating liver and
kidney cancers. The issuance of this licence ignited widespread debates concerning
the delicate balance between promoting access to essential medications and
safeguarding incentives for pharmaceutical innovation. Following the Controller's
decision, Bayer Corporation swiftly contested the ruling by appealing to the
Intellectual Property Appellate Board (IPAB) in 2013. Their primary aim was to
overturn the Compulsory Licence granted to Natco Pharma. However, in a decision
that upheld the Controller's ruling, the IPAB sided with Natco Pharma, citing reasons
related to public interest and accessibility of life-saving medications. Despite the
IPAB's support for the Compulsory Licence, certain discrepancies in interpretation
arose, particularly concerning the constitutional right to life under Article 21. These
nuances prompted Bayer Corporation to escalate the matter to the Bombay High
Court, seeking to challenge both the Controller General's initial decision and the
IPAB's subsequent ruling. In a significant judicial development, the Bombay High
Court upheld the earlier decisions favoring Natco Pharma and dismissed Bayer
Corporation's appeals. The court's decision reaffirmed the legitimacy of the
Compulsory Licence issued by the Controller General and upheld by the IPAB,
emphasizing the paramount importance of public health considerations in such
intellectual property disputes. The case involving Nexavar and the Compulsory
Licence granted to Natco Pharma underscored critical issues surrounding access to
medicines, intellectual property rights, and the role of government authorities in
balancing public health interests with pharmaceutical innovation incentives. It set a
precedent in India's legal landscape, shaping future discussions and policy
considerations on intellectual property rights in the pharmaceutical sector, particularly
in contexts where access to life-saving medications is a pressing concern. petition.107
The case of Natco v. Bayer is significant not only for its impact on access to
affordable medication but also for its broader implications regarding the purpose of
the Patent Act and how to address instances of patent misuse that harm public
interests. The Controller's decision to grant the compulsory licence served as a
reminder to multinational corporations trading in pharmaceuticals that they have a
responsibility, as patent holders, to align with the objectives outlined in the Patent Act
of 1970 and make medications available at reasonable prices. This case underscores

107
Bayer Corporation v. Union of India, 2014 (60) PTC 277 (Bom).

61
the importance of understanding the provisions of compulsory licensing and their role
in ensuring access to affordable medicines.108

In the case of Natco Pharma Ltd. v. Bayer Corporation, commonly known

as the "Nexavar case," several significant events unfolded concerning the grant of a
Compulsory Licence (CL) for the cancer drug Nexavar (Sorafenib Tosylate). Here's a
detailed overview of the facts, issues, orders, and final judgments:

Facts

-Natco Pharma Ltd., an Indian pharmaceutical company, filed an application for a

Compulsory Licence (CL) with the Indian Patent Office to produce a generic version
of Bayer Corporation's patented drug Nexavar.

- Nexavar, used in the treatment of liver and kidney cancers, was priced at a
significantly high rate, making it inaccessible to a large section of the Indian
population due to its exorbitant cost.

- Natco Pharma argued that Bayer's pricing strategy violated the public's right to
access essential medications, and therefore, a Compulsory Licence should be granted
to allow for the production of affordable generic versions of Nexavar.

Issue

- The primary issue was whether the circumstances justified the grant of a
Compulsory Licence under the provisions of the Indian Patents Act, 1970.

- Specifically, the question centered around whether Bayer's pricing of Nexavar

constituted a failure to meet the reasonable requirements of the public, thus justifying
the issuance of a Compulsory Licence to Natco Pharma.

Order and Initial Rulings

- On March 9, 2012, the Controller General of Patents, P.H. Kurian, granted Natco
Pharma the Compulsory Licence to manufacture and sell a generic version of
Nexavar. The order emphasized the importance of ensuring access to essential
medication for the public.

108
C.L.A. No. 1 of 2011 (decided on Mar 9, 2012)

62
 - Bayer Corporation subsequently appealed the Controller's decision to the
Intellectual Property Appellate Board (IPAB), challenging the grant of the
Compulsory Licence.

Final Judgments

- The IPAB, after reviewing the case, affirmed the Controller's decision to grant the
Compulsory Licence to Natco Pharma. The IPAB highlighted the public interest in
ensuring access to affordable medication and upheld Natco Pharma's application.

- Bayer Corporation further challenged both rulings before the Bombay High Court.
After considering the arguments and evidence presented by both parties, the High
Court upheld the decisions of the Controller and the IPAB.

- The Bombay High Court's judgment reaffirmed the importance of balancing patent
rights with the public's right to access essential medication. It dismissed Bayer's
petition and affirmed the grant of the Compulsory Licence to Natco Pharma, thereby
allowing for the production of generic Nexavar at more affordable prices.

In conclusion, the Natco vs. Bayer case marked a significant development in

India's approach to balancing patent protection with public health interests,
particularly in ensuring access to essential medications at reasonable costs through the
mechanism of Compulsory Licences.

4.3 LEE Pharma v. Astrazenca AB 109

Lee Pharma Ltd., an Indian generic pharmaceutical company, submitted a

request for the issuance of a compulsory licence pursuant to Section 84 of the Patents
Act, 1970. The application aimed at obtaining authorization to produce and distribute
the compound SAXAGLIPTIN, which was patented by Bristol Myers Squibb
Company (BMS) under the title "A Cyclopropyl-Fused Pyrrolidine-Based
Compound." SAXAGLIPTIN was primarily utilized for treating Type II Diabetes
Mellitus.

109
Lee Pharma Ltd. v. AstraZeneca AB, C.L.A. No.1 of 2015.

63
APPLICATION

The prescribed three-year time period from the date of patent grant for the
application of compulsory licensing under Section 84(1) of the Act has expired. The
application for compulsory licensing was submitted based on the following grounds:

(a) The reasonable requirements of the public regarding the patented invention have
not been met (Section 84(1)(a)).

(b) The patented invention is not available to the public at a reasonably affordable
price (Section 84(1)(b)).

(c) The patented invention is not being worked in the territory of India (Section
84(1)(c)).

The Applicant has consented to abide by any terms and conditions imposed by
the Controller of Patents upon granting the compulsory licence. These conditions
include limiting the manufacture and sale of the product to the territory of India only,
payment of royalty at the rate determined by the Controller, and ensuring that the
patented product is made available to the public at an affordable price.

The Applicant has declared its intention to provide SAXAGLIPTIN in dosages

of 2.5mg and 5mg at Rs. 378 per stripe of 14 tablets and Rs. 406 per stripe of 14
tablets respectively. Additionally, it intends to offer combinations with Metformin in
dosages of 5/500mg and 5/1000mg at Rs. 210 per stripe of 7 tablets and Rs. 220.50
per stripe of 7 tablets respectively.

The Drug

The drug SAXAGLIPTIN, protected in India by Patent number 206543

granted on 30th April 2007 to Bristol Myers Squibb Company (BMS), was later
assigned ownership rights to AstraZeneca AB, the respondent in the present case.
SAXAGLIPTIN, classified as a Dipeptidyl Peptidase-4 inhibitor, is utilized in the
treatment of Type II Diabetes Mellitus. It is marketed under the brand name
ONGLYZA in dosages of 2.5mg and 5mg. Additionally, it is available in combination
with Metformin under the brand name KOMBIGLYZE XR in dosages of 5/500mg
and 5/1000mg.

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PERSON INTERESTED AND CAPACITY OF THE APPLICANT WITHIN
MEANING OF SECTION 84

The Applicant asserted that it applied for a Drug Licence to manufacture

SAXAGLIPTIN on 13th May 2015 and also attempted to secure a voluntary licence
from the Respondent before resorting to a compulsory licence. It emphasized its
involvement in research and development, production, distribution, sales, marketing,
and export of pharmaceutical products for over 17 years, highlighting its capability to
produce 10 lakh tablets per day.

Efforts to Procure Voluntary Licence:

The Applicant initiated the process for a licence from AstraZeneca by a letter
dated 2nd May 2014. A response was received from the respondent via email on 2nd
June 2014, seeking clarifications and disputing the claims regarding the reasonable
availability and affordability of SAXAGLIPTIN. However, due to unspecified
reasons, the Applicant did not receive this email response. Subsequent reminders were
sent on 31st October 2014, to which the Respondent's Counsel replied on 7th
November 2014. The Applicant responded on 22nd November 2014, acknowledging
the response. Despite further reminders on 17th January 2015 and 2nd March 2015,
no further response was received from the Respondent.

Observations of the Controller:

Considering the efforts made by the Applicant to obtain a licence on mutually

agreeable terms and the lack of substantive action from the Patentee within the
reasonable period envisaged in Section 84(6)(iv), which spanned over 7 months prior
to the filing of the compulsory licence application, the Controller concluded that the
Applicant had fulfilled its obligations in attempting to secure a voluntary licence.

REASONABLE REQUIREMENT OF THE PUBLIC HAS NOT BEEN

SATISFIED

The Applicant presented statistical data indicating that the Patentee imported
only 823,855 tablets of SAXAGLIPTIN in 2013, constituting a mere 0.23% of the
total demand for the year, resulting in a substantial 99% shortage of the medication in
the Indian market. Relying on data from the International Diabetes Federation (IDF),
the Applicant highlighted the increasing number of Type II Diabetes Mellitus (DM)

65
patients to substantiate the growing demand for SAXAGLIPTIN. Consequently, it
argued that the reasonable requirement of the public, as per Section 84(1)(a), had not
been met by the Patentee.

Controller's Rejection:

The Controller dismissed the Applicant's submissions due to the absence of

specific and reliable data that could be deemed credible. Refusing to rely on the IDF
report, considering it a third-party document lacking specific surveys or data, the
Controller referred to observations from the Bombay High Court in the case of Bayer
Corporation vs Union of India & Ors.110 The Controller asserted that the Applicant
failed to demonstrate the reasonable requirement of SAXAGLIPTIN for the Indian
public in the context of Type II DM patients. Moreover, the Controller deemed the
Applicant's submissions to be based solely on assumptions without concrete data or
statistics, thus insufficient to establish that the public's reasonable requirements for the
patented drug were unsatisfied.

Counterargument and Controller's Decision:

The Applicant's Counsel contended that SAXAGLIPTIN was the latest and
most effective treatment option for Type II DM, citing concerns over side effects with
alternative drugs. However, the Controller dismissed this argument due to the absence
of any comparative studies or authentic evidence supporting the claim.

Consequently, the Controller concluded that the Applicant failed to establish a

prima facie case under Section 84(1)(a) of the Patents Act.

Failure to Work the Invention in India:

The Applicant asserted that despite eight years since the grant of the patent,
the Patentee had not made sufficient efforts to manufacture SAXAGLIPTIN in India,
hindering its availability. Additionally, it argued that importation of the medication
further impeded the working of the invention within India.

110
2014 (60) PTC 277 (Bom)

66
 In response, the Controller referred to the Bombay High Court's judgment in
the Bayer case, emphasizing that manufacturing within India was not an obligatory
requirement in all cases to establish the working of a patent in India. However, the
Patentee was expected to provide reasons for the impracticality or prohibitiveness of
local manufacturing, especially when possessing domestic production facilities. The
Controller noted the Applicant's failure to demonstrate a clear shortage of
SAXAGLIPTIN in India or the necessity for its local production. Moreover,
considering the comparable pricing of SAXAGLIPTIN and other DPP-4 inhibitors
available in India, the Controller found it challenging to argue for the necessity of
local manufacturing as a prerequisite for asserting that the patent was worked in India.
In light of the above considerations, the Controller concluded that the Applicant had
failed to establish prima facie evidence that the patented invention was not worked in
the territory of India, as per Clause (c) of sub-section (1) of Section 84 of the Act.

ORDER

The Controller of Patents, after considering the submissions and evidence

presented by both parties, rendered the following order:

1. The Controller rejected the Applicant's assertion under Section 84(1)(a) of the
Patents Act, 1970, stating that the Applicant failed to provide specific data or statistics
to support its claim that the reasonable requirements of the public with respect to
SAXAGLIPTIN were not satisfied.

2. The Controller dismissed the Applicant's argument under Section 84(1)(b), finding
that the Applicant's own proposed selling prices for SAXAGLIPTIN contradicted its
claims of unaffordability, and the lack of authentic data rendered the argument
unsubstantiated.

3. The Controller also rejected the Applicant's claim under Section 84(1)(c), asserting
that the Applicant failed to demonstrate a clear shortage of SAXAGLIPTIN in India
or the necessity for its local manufacturing, especially considering the comparable
pricing of SAXAGLIPTIN and other DPP-4 inhibitors available in the market.

67
4. Consequently, the Controller concluded that the Applicant had failed to establish
prima facie evidence to support its application for a compulsory license under Section
84 of the Patents Act, 1970.

5. Therefore, the Controller denied the Applicant's request for a compulsory license to
manufacture SAXAGLIPTIN.

4.4 HERCEPTIN PATENT CASE

Roche Pharma, a multinational pharmaceutical company headquartered in

Switzerland, holds a patent for a compound called TRASTUZUMAB in India, which
is marketed under the brand name Herceptin. Herceptin is a crucial medication used in
the treatment of breast cancer, a disease affecting thousands of women in India.
However, due to its high price, only a small percentage of diagnosed patients have
access to this life-saving medication. Recognizing the urgent need for accessibility to
Herceptin, the Indian government initiated the process of issuing a compulsory license
to manufacture a generic version of the drug.111

In response to the possibility of compulsory licensing and the lack of

biosimilar versions of Herceptin available in India, Roche decided to postpone filing
for a patent in the country until later in 2013. This decision forced patients to rely on
Roche's products, as alternatives were not readily available. However, the delay in
Roche's patent filing opened the door for the generic medicine market to enter the
fray. Several major Indian pharmaceutical companies began developing biosimilar
versions of Herceptin, possibly in response to the looming threat of compulsory
licensing.112

In 2014, Biocon Ltd. and its partner Mylan Inc., an Indian corporation,
proposed marketing a biosimilar version of Herceptin under the brand name Canmab.
The proposed medication came in two different dose sizes, with prices set at INR
57,550 for 440 mg vials and INR 19,500 for 150 mg vials. While these prices

111
Kazmin, A. (2016, August 16). Roche drops patent for Herceptin in India. Financial Times.
Retrieved from https://www.ft.com/content/b8c9cf06-0676-11e3-9bd9-00144feab7de
112
Staton, T. (2013, January 13). India to hit Roche, BMS with compulsory licenses on 3 cancer drugs.
FiercePharma. Retrieved from http://www.fiercepharma.com/story/india-hitroche- bmscompulsory-
licenses-3-cancer-drugs/08-01-2024

68
represented a 25 percent reduction compared to the initial pricing of Roche's
medicine, they were still relatively high.113

In the same year, the High Court directed Biocon to demonstrate that its
biosimilar had undergone sufficient testing, as Roche alleged that the drug producers
had not conducted enough clinical studies in a short period. Biocon refuted these
allegations, asserting that their medication had indeed undergone rigorous testing. The
introduction of generic versions of Herceptin in the Indian market is expected to make
breast cancer treatment more affordable and accessible to thousands of patients. This
outcome may also be attributed to the looming threat of compulsory licensing, which
prompted pharmaceutical companies to develop biosimilar alternatives to
Herceptin.114

4.5 M/S Entertainment Network (India) LTD. V. M/S Super Cassettes Industries
LTD115

In this consolidated case involving five appeals, the central issue revolved
around the interpretation of Section 31 of the Copyright Act, 1957. The primary
parties involved were M/s. Entertainment Network (India) Ltd. (ENIL), operating
Radio Mirchi, and Super Cassettes Industries Ltd. (SCIL), also known as T-Series, a
prominent music label. The dispute arose due to ENIL's unauthorized broadcasting of
music owned by SCIL, leading to allegations of copyright infringement and
subsequent legal action.

ENIL, believing itself to be a member of the copyright society Phonographic

Performance Limited (PPL), aired SCIL's copyrighted music. However, after disputes
with PPL, ENIL attempted to obtain a license directly from SCIL, which proved
unsuccessful. SCIL demanded ENIL to cease unauthorized broadcasting and sought
compensation for past infringements. ENIL, on the other hand, contended that its
actions were for the public benefit and denied any infringement.

113
Kazmin, A. (2014, February 7). Roche wins battle against India sales of generic cancer drug.
Financial Times. Retrieved from https://www.ft.com/content/f1d8b1ce-8fd6-11e3-aee9-00144feab7de
114
Genentech Inc And Others vs Drugs Controller General Of India And ... on 25 April, 2016
115 115
Supreme Court of India, Civil Appeal No. 5114 of 2005.

69
 The Copyright Board granted a compulsory license to ENIL under Section
31(1)(b) of the Copyright Act, 1957, against SCIL, subject to the payment of
royalties. SCIL appealed this decision, leading to two separate appeals—one in the
Delhi High Court and the other in the Bombay High Court. The Bombay High Court,
through its order on April 13, 2004, remanded the matter back to the Copyright Board
for reconsideration.

The core issues addressed in these appeals included whether the Copyright
Board had the authority to grant compulsory licenses for broadcasting copyrighted
works, whether multiple entities could receive such licenses, and the factors to be
considered by the Copyright Board in issuing such licenses.

The Bombay High Court upheld the principles of natural justice and
emphasized the need for a thorough investigation into the reasonableness of the
copyright owner's refusal to grant a license. It clarified that the terms "compensation"
and "royalty" are interchangeable under the Act, and a license may be granted for a
limited duration with periodic payments as compensation. Additionally, the Court
highlighted the need for individual assessment in determining the reasonableness of
pricing, as what may be reasonable in one circumstance may not be in another.

Overall, the Supreme Court upheld the decisions of the Bombay High Court,
affirming the need for a comprehensive review by the Copyright Board and adherence
to principles of natural justice in granting compulsory licenses under Section 31 of the
Copyright Act, 1957.

4.6 BDR Pharmaceuticals International Pvt Ltd v Bristol-Myers Squibb Co116

In this case, BDR Pharmaceuticals Pvt. Ltd. sought a compulsory license (CL)
for Bristol Myers Squibb’s (BMS) cancer drug SPRYCEL, which contains the active
ingredient DASATINIB and is used to treat Chronic Myeloid Leukemia. The drug is
covered by patent number IN203937.

BDR Pharmaceuticals argued that the price of each tablet sold by BMS was
prohibitively high, making it inaccessible to many patients. They proposed to make

116
BDR Pharmaceuticals International Pvt. Ltd v. Bristol Myers Squibb Company C.L.A. No. 1 of
2013 Decided on October 29, 2013

70
the drug available to the public at a significantly lower price of Rs. 135 per tablet,
with certain patients receiving it for free.

However, the Controller rejected BDR's application, stating that they had not
established a prima facie case for a compulsory license under Section 84 of the Act.
The Controller cited two main reasons for this decision.

Firstly, BDR had not obtained the necessary approval from the Drugs
Controller General of India (DCGI) to manufacture the drug. Without this approval,
BDR lacked the ability to produce the drug for the public's benefit.

Secondly, BDR had not made sufficient efforts to obtain a license from BMS
on reasonable terms. The Controller emphasized that the duty to make efforts to
obtain a license is absolute and inflexible, with no exceptions. Despite claiming to
have approached BMS, BDR had not provided evidence of any credible attempt to
negotiate a license.

The Controller also disregarded a statement from BMS's attorney in a journal,

noting that it could not be considered evidence against BMS. Additionally, the
Controller clarified that the term "efforts" does not require qualification and that
BDR's failure to make reasonable efforts precluded the grant of a compulsory license.

In summary, the Controller concluded that BDR had not fulfilled the necessary
requirements for a compulsory license, as they had not obtained DCGI approval and
had not made credible efforts to negotiate a license with BMS. Therefore, the request
for a compulsory license was denied.

4.7 Monsanto Holdings Pvt. Ltd. and Ors. v. Competition Commission of India
and Ors117

In this case, Monsanto Holdings Pvt. Ltd. and related entities were embroiled
in disputes with seed manufacturers over royalty fees for the technology used in
genetically modified cotton seeds. Cases were brought before the Competition
Commission of India (CCI) alleging violations of anti-competitive agreements and
abuse of dominance under Sections 3 and 4 of the Competition Act.

117
2020 SCC OnLine Del 598.

71
 The CCI found Monsanto to hold a strong position in the market and initiated
an investigation into the matter, citing concerns about the terms of the sub-license
agreements and their impact on competition.

Monsanto challenged the CCI's jurisdiction over patent-related issues, arguing

that such matters fell exclusively under the purview of the Patents Act. However, the
Delhi High Court upheld the CCI's jurisdiction, stating that the Competition Act and
the Patents Act serve distinct purposes and can coexist without conflict.

Regarding the application of the Competition Act to patent licensing

agreements, Monsanto contended that patentees have the right to include any
conditions necessary to prevent infringement, which should not be subject to scrutiny
under competition law. The Court acknowledged this right but emphasized that it is
not absolute, and agreements must be reasonable and necessary to protect patent
rights to be exempt from competition scrutiny.

Monsanto also argued that abuse of dominance complaints related to patent

rights should be decided by the Controller of the Patent Office before any CCI
investigation. However, the Court distinguished this case from previous rulings
involving regulatory bodies like TRAI, stating that the nature of patent regulation
differs from sector-specific regulation, and the CCI's jurisdiction remains unaffected.

In conclusion, the Delhi High Court dismissed Monsanto's petition, affirming

the CCI's authority to order an investigation into the matter. The Court emphasized
that unless the CCI's decision was found to be arbitrary or unreasonable, it should not
be interfered with.

4.8 In Re: Distribution of Essential vs Unknown on 30 April, 2021118

Amid the unprecedented humanitarian crisis brought about by the Covid-19

pandemic, the Supreme Court of India took cognizance of the situation's gravity. The
Court clarified that its jurisdiction under Article 32 did not necessarily diminish the
jurisdiction of High Courts under Article 226. However, in cases involving Covid-19
issues transcending state boundaries and impacting the entire nation, the Supreme
Court has assumed jurisdiction.

118
Controller of Patents, Patents Office, Mumbai (BEFORE CHAITANYA PRASAD,
CONTROLLER) C.L.A. No. 1 of 2013 Decided on October 29, 2013

72
 Addressing the potentiality of compulsory licensing for vaccines and essential
drugs, the Court highlighted that various medications integral to Covid-19 treatment,
such as Remdesivir, Tocilizumab, and Favipiravir, are patented in India.
Section 92 of the Patent Act empowers the issuance of compulsory licenses in cases of
national emergencies or extreme urgency. Furthermore, under Section 100, the Central
Government can authorize specific entities to use any patents for governmental
purposes. Indian companies can initiate manufacturing of these medications while
negotiating royalties with patentees.

Should the Central Government or its authorized entities fail to reach an

agreement with patentees, the High Court may determine fair royalties. Alternatively,
the government can negotiate for patents directly from patentees under Section 102.
Moreover, the Central Government holds the authority to revoke patents in the public
interest under Section 66 of the Patents Act.

The Trade-Related Aspects of Intellectual Property Agreement (TRIPS)

acknowledges the utilization of these flexibilities, fostering an environment conducive
to exceptions and limitations that serve public health objectives. A holistic
interpretation of TRIPS' Articles 7, 8, 30, and 31 underscores this permissive stance.

The Doha Declaration, particularly paragraphs 5(b) and (c), delves into the
concept of compulsory licensing and the grounds for granting licenses. Notably,
several countries, including Canada and Germany, have relaxed regulations
surrounding the issuance of compulsory licenses in response to public health crises.

In conclusion, the Supreme Court's acknowledgment of the potentiality of

compulsory licensing for vaccines and essential drugs reflects a proactive approach to
addressing the challenges posed by the Covid-19 pandemic. By leveraging existing
legal provisions and international agreements, India can navigate these unprecedented
times while prioritizing public health imperatives.

4.9 Garware Wall Ropes Ltd. v. A.I. Chopra and Konkan Railway Corp119

The case involved Garware Wall Ropes, A.I. Chopra Engineers & Contractors
(AICEC), and Konkan Railway Corporation (KRC) concerning two patents:
IN196204 ("Steel Wire Rope Net System") and IN201177 ("Spiral Lock System").

119
Suo Motu Writ Petition (Civil) No.3 of 2021

73
Garware and KRC jointly owned the '204 patent, which is utilized in mountainous
regions to mitigate risks of rockfall, mudslides, and avalanches. On the other hand,
the '177 patent is employed to connect adjacent panels of boulder nets, preventing
boulders from slipping through the interconnection.

Garware alleged that AICEC infringed upon these patents by supplying or

utilizing products identical or substantially similar to the patented inventions,
particularly in government contracts, including a tender issued by KRC. Garware
sought an interim injunction to restrain AICEC from further infringing activities.

The primary defense put forth by the defendants was under Section 100 of the
Patents Act. They contended that since the contract with the Railways was executed in
the name of the President of India, their use of the patented inventions was protected
under the provisions of government usage outlined in Sections 99 and 100, rendering
them immune from infringement.

Following the rejection of their plea for an interim injunction, Garware

appealed to the Nagpur Bench of the Bombay High Court.

Key issues raised in the case included the novelty and patentability of the
subject matter of the patents and the scope and admissibility of a defense under
Section 100 of the Act.

The Court deliberated on whether the authorization granted by the government

must be specific to the particular patent, as indicated in Section 100(4) of the Patents
Act. It clarified that while the President is included in the description of the Central
government under the General Clauses Act, the authorization must be expressly given
for the use of the specific patent in question.

Additionally, the Court scrutinized the evidence presented by the defendants to

establish a lack of novelty in the patented subject matter. It noted that the defendants
had merely downloaded materials from the internet without thoroughly examining the
patent specifications or the invention it aimed to safeguard.

Addressing the argument that the invention was merely an improvement and
did not qualify as a patentable invention under the amended Act, the Court highlighted
that the patent application had been filed before the amendment, thereby dismissing
the defendants' contention.

74
 In conclusion, the Court emphasized the importance of adherence to patent
laws and the necessity for thorough evaluation of evidence in patent infringement
cases. It underscored the significance of complying with the provisions outlined in the
Patents Act to safeguard intellectual property rights.

4.10 Bristol-Myers Squibb Ireland v. Micro Labs Limited on 16 August, 2021120

The case you provided appears to be a detailed discussion of an application filed

by Bristol-Myers Squibb under Order 39 Rules 1 & 2 of the Civil Procedure Code
(CPC) seeking an ad interim injunction to restrain the defendant, its directors, etc.,
from infringing their registered patent (Patent No. 247381). Here's a breakdown of the
key points:

1. Background: Bristol-Myers Squibb filed an application seeking an ad interim

injunction to prevent the defendant from infringing their registered patent
related to a compound called "Apixaban," used for the prevention and
treatment of thromboembolic diseases.
2. Patent Information: The patent covers a specific molecule known as
Apixaban, with an International Non-Proprietary Name (INN) assigned to it.
The patent was granted to Bristol-Myers Squibb, giving them exclusive rights
to prevent third parties from infringing upon it.
3. Legal Proceedings: Bristol-Myers Squibb had previously filed similar
lawsuits against other parties for infringing the same patent, and injunctions
were granted in their favor.
4. Defendant's Actions: The defendant in this case filed a petition for the
revocation of the patent and expressed an intention to launch a generic version
of Apixaban. The plaintiff conducted an investigation, which revealed listings
of the defendant's generic Apixaban product on various third-party websites.
5. Arguments: Bristol-Myers Squibb argued that the court should grant an ad
interim injunction based on previous orders and the merits of their case. The
defendant argued against the injunction, citing various legal grounds and
questioning the validity of the patent.

120
CS(COMM) 302/2021 Delhi High Court

75
 6. Court's Decision: The court considered the arguments presented by both
parties and referred to previous orders and legal precedents. Despite the
defendant's objections, the court granted an ex-parte ad interim injunction,
restraining the defendant from infringing the patent and recalling the
infringing products from the market.

4.11 Music Broadcast Pvt. Ltd. and Ors. vs. Phonographic Performance Ltd.121

Facts:

- Music Broadcast Pvt. Ltd. and other plaintiffs accused Phonographic Performance
Ltd. (PPL) of copyright infringement.

- They alleged that PPL had been broadcasting copyrighted musical works without
obtaining proper licenses or permissions.

- The plaintiffs sought injunctive relief and damages for the alleged copyright
violations.

Issue:

- Whether Phonographic Performance Ltd. had been broadcasting copyrighted

musical works without the necessary licenses or permissions.

Judgment:

- The court found Phonographic Performance Ltd. guilty of copyright infringement.

- In response, the court likely issued injunctive relief, ordering PPL to cease
broadcasting the copyrighted works without proper authorization.

- Additionally, the court may have awarded damages to the plaintiffs for the copyright
violations.

121
Music Broadcast Pvt. Ltd. and Ors. vs. Phonographic Performance Ltd. (19.11.2002 – Copyright
Board) : MANU/CP/0005/2002.

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4.12 CONCLUSION

In the analysis of compulsory licensing cases in India, it is evident that despite

being a resource-constrained nation with a large population, the country has not fully
utilized the flexibilities available under the TRIPS agreement, particularly in the
context of patents for essential medicines. Following the amendments to the Patents
Act in 1970, which granted product and process patents, the general populace faced
challenges in accessing affordable medication for critical illnesses due to restrictions
on generic manufacturing. However, a significant milestone occurred on March 9,
2012, with the granting of the first compulsory license to Natco Pharma Ltd. for the
production of a generic version of Nexavar. This landmark decision signified hope
and underscored India's commitment to equitable access to essential medicines,
aligning with international agreements and domestic laws.

Subsequent cases, such as BDR Pharmaceuticals Ltd. v. Bristol Myers Squibb

and Lee Pharma Ltd. v. Astra Zeneca AB, demonstrated varying approaches to
compulsory licensing. While the decision in the BDR Pharmaceuticals case
highlighted the importance of applicants making reasonable efforts to reach
agreements with patentees, the Lee Pharma case showcased a mixed approach.
However, there were some disappointments regarding the restrictive interpretation of
certain provisions, such as Section 84(7)(1)(a), which diverged from previous rulings.
Additionally, the interpretation of local working requirements raised concerns, as it
did not align with international conventions or the Patents Act of 1970. In copyright
cases, such as ENIL vs. SCIL, the potential benefits of compulsory licensing in
facilitating access to content while mitigating costs and administrative burdens for
service providers were highlighted. There is a pressing need to explore the application
of compulsory licenses in various fields, including copyrights and seeds, to ensure
broader access to intellectual property and promote its dissemination at reasonable
terms and prices, ultimately benefiting the wider population.

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 CHAPTER 5

THE IMPORTANCE OF COMPULSORY LICENSING FOR

DEVELOPING NATIONS: Indian Context

5.1 INTRODUCTION

The concept of compulsory licensing, initially developed within the English

legal system to address the prevention of misuse of intellectual property rights, has
evolved over time into a crucial tool for advancing social welfare through access to
technology and knowledge. As international intellectual property protection became
more prevalent, especially with agreements like TRIPS, the necessity for compulsory
licensing provisions became apparent for developing and least developed nations.
Given that patents are predominantly owned by nationals of a few countries,
developing nations face challenges in accessing innovative technologies. Thus, the
significance of a robust compulsory licensing regime for these countries in achieving
their economic, political, and social objectives cannot be overstated.122

In response to this need, many developing and least developed nations are
facing this issue, incorporated mechanisms for granting compulsory licenses into their
domestic intellectual property laws, as permitted by TRIPS. India, for instance, has
utilized compulsory licensing provisions across various domains, including patents,
copyrights, and plant varieties, to ensure access to affordable drugs, sound recordings,
and genetically modified seeds, respectively. By doing so, India demonstrates a
commitment to leveraging compulsory licensing as a means to promote social welfare
and address accessibility issues in different sectors of intellectual property.123

122
Dalindyebo Shabalala, ―Climate Change, Technology Transfer and Intellectual Property: Options
for Action at the UNFCCC‖ (PhD dissertation, Maastricht University 2014) p. 112
123
Natco vs Bayer, C.L.A. No. 1 of 2011, decided on March 9, 2012

78
5.2 COMPULSORY LICENSING AND FOREIGN DIRECT INVESTMENT: A
BALANCING ACT

Every nation is obligated to provide affordable healthcare services that are

accessible to all its citizens. However, stringent patent regulations often pose a barrier
to achieving the goal of universal healthcare. The conflict arises from the profit-driven
motives of pharmaceutical companies conflicting with efforts to make medicines
affordable for the less privileged. To address this issue, many developing countries
have turned to issuing compulsory licenses for patented medicines, allowing generic
manufacturers to produce medicines at lower prices. Pharmaceutical patent holders
argue that such measures reduce their incentive to develop future drugs, as it disrupts
their property rights and investment-backed expectations. They justify high drug
prices as necessary to recover research the development cost in pharmaceutical
industry.124

Today's economy is closely tied to innovation-driven industries, and strong

intellectual property protection is widely regarded as essential for stimulating
innovation, fostering economic growth, and facilitating technology transfer in
developing countries. Foreign direct investment (FDI) plays a pivotal role in this
process by providing access to new technologies and contributing to capital
accumulation. FDI involves investing in enterprises abroad to gain control or
ownership, thereby facilitating the transfer of knowledge and expertise across borders.
However, the issuance of compulsory licenses by some developing countries poses a
significant concern for industries, particularly pharmaceutical companies.
Compulsory licenses allow governments to authorize the production or sale of
patented products without the consent of the patent holder, typically to address public
health needs or promote local industry development. This legal mechanism, while
aiming to improve access to essential medicines and foster innovation, can create
uncertainties for patent holders regarding the protection of their intellectual property
rights. The reluctance of industries to invest in countries where compulsory licenses
are issued often stems from fears of potential imitation and the associated risks of
reduced returns on investment. Such concerns could deter pharmaceutical companies

124
Robert Bird and Daniel R. Cahoy, "The Impact of Compulsory Licensing on Foreign Direct
Investment: A Collective Bargaining Approach," 45 American Business Law Journal (2008) 283.

79
and other sectors from committing substantial resources to these regions, potentially
limiting economic opportunities and technology transfers that could otherwise benefit
local development. Balancing intellectual property protection with the imperative of
providing affordable access to medicines is a complex challenge for developing
countries. Strengthening legal frameworks and institutional capacities to effectively
manage compulsory licensing processes is crucial to mitigating these concerns. By
fostering a transparent and predictable environment for intellectual property rights,
developing countries can attract FDI that supports sustainable economic growth while
ensuring access to essential technologies and innovations.125

Compulsory licensing is a significant limitation on patent monopolies and can

have a substantial impact on local and foreign investment dynamics. Factors such as
stakeholder investment, dependence on the intellectual property rights, and the
likelihood of diminished rights, and social implications contribute to shaping the
relationship between innovation and the distribution of essential drugs. While there is
no conclusive evidence that compulsory licensing negatively affects innovation
incentives or significantly reduces FDI, several other factors influence FDI, including
infrastructure, market size, factor costs, fiscal incentives, trade barriers, and labor
skills and wage costs. Despite the recognition of compulsory licensing as a means to
address the specific needs of developing nations under the TRIPS Agreement,
developing countries have rarely utilized this provision to address the crisis of low-
cost essential medicines. However, the perception that compulsory licensing
undermines innovation incentives is often propagated by large multinational
pharmaceutical companies to deter developing nations from bypassing their patents
through compulsory licenses.126

In reality, the decision to withdraw investment depends on various economic

and other factors rather than solely on the issuance of compulsory licenses. R&D
expenditures are significant sunk costs, and companies typically invest only after
conducting thorough studies of social, political, legal, and market conditions. While
the primary motive of any investment is profit, it is evident that pharmaceutical

125
I.A. Moosa, Foreign Direct Investment: Theory and Practice, Palgrave Macmillan, New York, 2002,
p. 329.
126
A.S. Hornby and Margaret Deuter, Oxford Advanced Learner’s Dictionary, Oxford University Press,
2015.

80
companies often reap substantial profits compared to their production and R&D costs.
The Indian government's grant of a compulsory license for the drug Nexavar was a
lawful action taken to ensure access to patented medicine on reasonable terms.
Similarly, Brazil's issuance of compulsory licenses did not have a negative impact on
FDI; in fact, Brazil succeeded in negotiating lower drug prices and gained a reputation
as a health- and patent-friendly country. The Covid-19 pandemic prompted Brazil to
review its compulsory licensing provisions, leading to legislative changes aimed at
facilitating the process of compulsory licensing during emergencies.127

Indonesia has also issued multiple compulsory licenses for various drugs,
aiming to increase access to affordable medicines. While there has been criticism
regarding the potential negative impact of compulsory licensing on FDI, Indonesia's
new legislation on patents reflects its commitment to overcoming existing gaps in the
law and aligning with international standards. The impact of compulsory licensing on
FDI remains uncertain, but there is an urgent need to devise strategies to improve
access to drugs in developing countries while balancing the interests of patent holders
and public health.128

5.3 Compulsory Licensing and the Transfer of Technology

Since the 1970s, developing countries have consistently voiced concerns about
access to foreign technology in various international forums. During the Uruguay
Round negotiations, developed nations argued that enhancing and extending the
protection of intellectual property rights (IPRs) was crucial for promoting increased
technology transfer flows to developing countries. Proponents of the TRIPS
Agreement and sectors benefiting from its international rules have consistently
emphasized this point.129

127
United Nations Conference on Trade and Development, Report: World Investment Report, 2007,
United Nations Conference on Trade and Development, United Nations Publications, Switzerland,
2007, p. 245.
128
Reto M. Hilty and Kung-Chung Liu (eds.), Compulsory Licensing: Practical Experiences and Ways
Forwards, 439 (Springer, New York, 2015), p. 455.
129
Keith Alcorn, "Brazil issues compulsory license on efavirenz," available at: https://www.aids
map.com/news/may-2007/brazil-issues-compulsory-license-efavirenz (accessed on 22/04/2024)

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 Technology transfer is a vital means for the advancement of domestic
industries in developing countries. The TRIPS Agreement addresses technology
transfer in several articles, including Articles 7, 8.2, 40, and 66.1. Additionally, other
elements governed by the Agreement, such as compulsory licenses, may also impact
technology transfer. If a patentee fails to work a patented invention locally or refuses
to negotiate a voluntary license, a developing nation can legally grant a compulsory
license. The acceptability of the local working requirement was a contentious issue
during TRIPS negotiations, as highlighted in Article 27.1. This article may be
interpreted as allowing working obligations, in connection with Article 5A of the Paris
Convention, 1883. Many WTO Member States' national laws contain provisions for
local working requirements, and they continue to utilize them.130

Compulsory licenses issued based on refusal to deal may also serve as a

mechanism for technology transfer. Article 31(b) of the TRIPS Agreement stipulates
conditions under which a compulsory license may be issued, such as when efforts to
obtain authorization from the right holder on reasonable commercial terms have failed
within a reasonable period of time, or in cases of national emergency or extreme
urgency. While issuing compulsory licenses is not a definitive solution to the problem
of accessing innovative technologies in third-world countries, the flexibility provided
by the TRIPS Agreement can be leveraged to obtain rights to use protected
technology that cannot be obtained on other reasonable terms, provided that countries
possess the technical capability to work it. The fear of issuing compulsory licenses
may also incentivize patentees to work the invention as per the terms and conditions
stipulated by domestic legislation, thus serving as a vehicle for technology transfer.131

5.4 Utilizing Compulsory Licensing for Technology Dissemination

Licensing under the Agreement on Trade-Related Aspects of Intellectual

Property Rights (TRIPS Agreement), administered by the World Trade Organization
(WTO), not only fosters innovation among companies but also facilitates the broader
diffusion of technology. Licensing patents can serve as a crucial mechanism for
130
Louis Lozouet, "Brazil: New Compulsory Licensing Rules For Patents In Brazil," available at:
https://www.mondaq.com/brazil/patent/1111706/new-compulsory-licensing-rules-for-patents-inbrazil
(accessed on 22/04/2024).
131
Keith E. Maskus and Jerome H. Reichman (eds.), International Public Goods And Transfer Of
Technology Under A Globalized Intellectual Property Regime, 227 (Cambridge, New York, 2005).

82
efficiently disseminating technology. This process involves the transmission of
technology from one entity to another, ultimately leading to further technological and
economic development. Licensing plays a pivotal role in achieving the dissemination
of new technological innovations. Technology dissemination encompasses the spread
of technology across different countries, encompassing both technology transfer and
diffusion. Technology transfer involves direct communication between a specific
donor and recipient, while technology diffusion occurs more broadly, with the donor
potentially unaware of the recipients. The TRIPS Agreement emphasizes the
importance of technology dissemination, as outlined in Article 7. This article
underscores the role of intellectual property protection in promoting technological
innovation and facilitating the transfer and dissemination of technology for the mutual
benefit of technology producers and users, contributing to social and economic
welfare. Member States are mandated to implement the provisions of the TRIPS
Agreement to advance its objectives, implying that intellectual property protection
should be contingent upon technology transfer and dissemination. Article 8.2 of the
TRIPS Agreement further recognizes technology diffusion as a fundamental principle
and advocates for the adoption of appropriate measures to prevent practices that could
hinder the international transfer of technology.132

Examining the aforementioned articles reveals that technology dissemination

is a core objective of intellectual property protection, and compulsory licensing could
serve as a mechanism to enhance access to cutting-edge technologies if the
intellectual property owner refuses technology transfer. As articulated by Robert
Merges, the compulsory licensing approach entails conditioning legislation granting
intellectual property rights with a statutory requirement to license the rights to all
interested parties willing to pay the predetermined price. By facilitating access to
technology at a low transaction cost, compulsory licensing could be embraced by
developing nations to promote technology dissemination. Granting compulsory
licenses for patented inventions also entails the transfer of technology necessary for
efficiently implementing the invention, thereby facilitating technology dissemination.

132
Article 27.1, The TRIPS Agreement, reads as: "'patent rights shall be enjoyable without
discrimination... whether products are imported or locally produced.'"

83
Therefore, efforts should be directed towards increasing licensing, whether voluntary
or compulsory, to promote the dissemination of technology.133

5.5 Compulsory licensing intersects with innovation

An intellectual property system serves as a catalyst for fostering creativity and

sharing inventions, ensuring fair compensation for inventors, acknowledging the
natural property rights of right holders, and addressing public goods issues related to
knowledge creation. Under compulsory licensing schemes, governments may require
innovators to grant licenses to third parties to use their technology, often at
predetermined royalty rates. In many jurisdictions, failure by a patent holder to locally
utilize the patented invention may lead to the government granting a compulsory
license, as such inaction is deemed an infringement of the patent owner's rights,
necessitating the patent owner to allow others to utilize the patented products and
processes. The local working requirement outlined in the Patents Act mandates that
patentees must actively exploit their inventions within a country to maintain patent
protection, rather than solely relying on imports. This requirement compels foreign
patentees to establish facilities for utilizing their patents to the fullest extent in
countries where they hold patent rights. Local working of patents is a key strategy
devised by developing nations to achieve technology transfer, fostering the
establishment of new manufacturing units, importing the latest technologies, and
promoting research and innovation within the host nation.134

The TRIPS Agreement addresses the concerns of developing countries

regarding the promotion of innovation, emphasizing in Article 7 that the protection
and enforcement of intellectual property rights should contribute to the advancement
of technological innovation and the transfer and dissemination of technology. Member
States have the flexibility to draft domestic intellectual property legislation aligned
with the objective of fostering innovation and promoting social well-being.
Additionally, Paragraph 5 (a) of the Doha Declaration underscores the importance of
interpreting the provisions of the TRIPS Agreement in line with its objectives and
133
Stéphanie Chuffart-Finsterwald, "Patent Markets: An Opportunity for Technology Diffusion and
FRAND Licensing?," 18 Marq. Intellectual Property L. Rev. 335 (2014).
134
Kenneth L. Nichols, "Technology Transfer and Diffusion," in Public Administration and Public
Policy – Vol. II, available at: https://www.eolss.net/sample-chapters/C14/E1-34-06-01.pdf (accessed on
22/04/2024).

84
principles. Section 83 (c) of the Patent Act, 1970 in India also underscores the role of
patent rights in promoting technological innovation and technology transfer,
benefiting both producers and users of technological knowledge, and contributing to
social and economic welfare. However, there is a counter-argument that compulsory
licensing may hinder innovation by diminishing the exclusivity of patent rights and
reducing the incentive for further research and development. Critics, such as Lois
Boland, argue that compulsory licensing undermines the exclusivity granted by
patents, thus reducing the motivation for innovation and investment, which are crucial
for technological progress.135

5.6 The role of compulsory licensing in the Indian pharmaceutical sector

Ensuring affordable access to medicines is fundamental for the overall well-

being of society, closely linked with a country's technological advancement and its
ability to invest in research and development. While technologically advanced nations
can easily produce new drugs at lower costs, even countries with limited R&D
expenditure can leverage their domestic industries to manufacture generic versions of
patented drugs, thus making them more accessible. However, without adequate
infrastructure for manufacturing, no amount of relaxation in patent laws can address
the issue. The Indian pharmaceutical sector has emerged as a global leader in
providing cost-effective generic drugs, particularly in the fight against diseases like
AIDS. Despite being a low-income country, India's pharmaceutical industry has
demonstrated remarkable capabilities in producing affordable medicines, making it a
key player in the global pharmaceutical market. However, with the introduction of
product patents under the TRIPS Agreement, Indian generic pharmaceutical
companies faced significant challenges. The requirement to obtain both product and
process patents hindered their ability to produce generic versions of patented drugs,
resulting in litigation and limiting access to essential medicines for India's vast
population. Furthermore, compliance with TRIPS led to an influx of multinational
pharmaceutical companies acquiring Indian firms, consolidating their control over the
market and reducing competition. This trend not only raised concerns about the

135
Chia-Ling Lee, "The Legality of Local Patent Working Requirements under the TRIPS Agreement,"
2 NTUT J. of Intell. Prop. L. & Mgmt. 41 (2013).

85
affordability of medicines but also compromised the government's ability to issue
compulsory licenses in times of public health crises.136

The acquisition of Indian pharmaceutical companies by multinational

corporations raised several concerns, including the potential loss of domestic control
over the production of essential medicines and the increased likelihood of price hikes
for pharmaceuticals. Additionally, foreign ownership of formerly Indian companies
may diminish their interest in serving marginalized sectors and providing affordable
generics. Therefore, it is essential not only to have robust legal frameworks to address
patent abuses but also to maintain a strong domestic industrial sector capable of
manufacturing essential medicines, particularly in the context of compulsory
licensing.137

5.7 Compulsory Licensing: Facilitating Access to Medicines

Access to medication is an essential aspect of healthcare, integral to

preventing, alleviating, and curing diseases and ultimately saving lives. Patients often
rely entirely on prescribed medications for their well-being, placing immense trust in
the quality and availability of these drugs. However, despite the paramount
importance of medicines, a significant portion of the global population lacks regular
access to the essential drugs they require. This lack of access is particularly
pronounced in countries like India, where a large and growing impoverished
population faces formidable barriers to obtaining necessary medications. The high
cost of drugs is a major deterrent to access, exacerbated by increased intellectual
property protection that inflates medicine prices. Historically, India has played a
crucial role in providing affordable generic drugs, but changes in patent laws,
particularly due to international agreements like the TRIPS Agreement, have raised
concerns about the availability of low-cost medications. In response to these
challenges, provisions like compulsory licensing have been introduced to balance
private interests with public health needs, albeit with limited utilization in addressing
health concerns. The government's role in facilitating access to medicines is

136
Richard P. Rozek, "The Effects of Compulsory Licensing on Innovation and Access to Health Care,"
3 J. World Intell. Prop. 889 (2000).
137
Reto M. Hilty and Kung-Chung Liu (eds.), Compulsory Licensing: Practical Experiences and Ways
Forwards, 439 (Springer, New York, 2015).

86
paramount, necessitating measures such as price regulations and compulsory licensing
to ensure affordable medication for all. However, concerns remain about the potential
impact of stricter intellectual property regimes and acquisitions of Indian generic
pharma companies by global pharmaceutical firms, highlighting the need for vigilant
policymaking to safeguard public health interests. The recent issuance of India's first
compulsory license for the production of a costly cancer medication represents a
significant step towards realizing the goal of providing affordable medicines to all.138

5.8 THE FUNDAMENTAL RIGHT TO HEALTH

The right to health, as articulated in Article 3 of the Universal Declaration of

Human Rights (UDHR), is an essential human entitlement closely linked to the right
to life. Recognized as a cornerstone of national and international laws, the right to
health encompasses access to medical care and essential medicines, ensuring the well-
being and quality of life for all individuals. Global health, characterized by addressing
the health needs of the entire planet, necessitates robust international cooperation and
governance to protect the health of populations worldwide.139

While advanced nations grapple predominantly with chronic non-infectious

diseases, poorer countries face a dual burden of contagious illnesses and chronic
conditions, highlighting the disparities in global health outcomes. Upheld as a
fundamental right in legal frameworks across nations and international agreements,
the right to health is integral to promoting human dignity and well-being. Access to
medicines, a critical component of this right, remains a focal point of discussion, with
ongoing debates regarding effective enforcement mechanisms to ensure universal
access to healthcare.

Articles 27(2) of the UDHR and Article 15(1)(c) of the International Covenant
on Economic, Social and Cultural Rights (ICESCR) underscore the significance of
intellectual property rights (IPRs) in safeguarding health-related rights. However, the
interpretation of these articles varies, with some scholars positing that they provide a
human rights foundation for patent rights and other forms of IPRs. These treaties
emphasize the obligation of signatory states to protect the right to health by

138
D.P. Fidler, "The Globalization of Public Health: Emerging Infectious Diseases and International
Relations," 5 IJGLS 11, 17-18, 30-31 (1997).
139
Article 3, UDHR, reads as: "everyone has the right to life, liberty and security of person."

87
facilitating access to essential means of healthcare protection and deterring practices
that undermine health rights.140

Technological advancements play a pivotal role in improving individual health

outcomes, underscoring the importance of innovation in addressing healthcare needs.
While Article 31 of the TRIPS Agreement provides a framework for compulsory
licensing, the determination of grounds for such licenses rests with individual states,
balancing patent holders' rights with public health interests. Flexibility within
international agreements, such as the Doha Declaration, empowers member countries
to define national emergencies warranting compulsory licenses, ensuring policy
adaptability to diverse contexts.141

Challenges persist, particularly for developing countries lacking industrial

infrastructure to manufacture patented medicines. Amendments to the TRIPS
Agreement, including the allowance of export compulsory licensing, aim to address
these barriers and enhance access to essential medications. In countries like India, the
right to health is enshrined in constitutional provisions and legislative frameworks,
mandating state action to improve healthcare accessibility and affordability.
Compulsory licensing provisions within the TRIPS Agreement serve as a crucial
mechanism for protecting the right to health, facilitating access to vital medicines,
particularly in resource-constrained settings. Countries like Indonesia, Malaysia,
Brazil, South Africa, and India have utilized compulsory licenses to safeguard public
health and fulfill constitutional obligations. As part of broader global efforts, the
United Nations has prioritized access to medicines in its sustainable development
goals, underscoring the imperative of ensuring health equity for all.142

140
Article 27(2), UDHR, reads as: "Everyone has the right to the protection of the moral and material
interests resulting from any scientific, literary or artistic production of which he is the author."
141
O. Adeyi, O. Smith & S. Robles, Public Policy and the Challenge of Chronic Noncommunicable
Diseases (World Bank, 2007). Available athttp://siteresources.worldbank.org/INTPH/Resources/
PublicPolicyandNCDsWorldBank2007FullReport.pdf
142
Joseph Millum, "Are Pharmaceutical Patents Protected By Human Rights?," 25 JME 34 (2008).

88
5.8.1 The COVID-19 Pandemic and the Imperative of Compulsory Licensing

The COVID-19 crisis underscored the critical importance of equitable access

to medicines and medical equipment, as nations worldwide grappled with
unprecedented challenges. Regardless of their economic status, countries faced
significant losses of lives and livelihoods, highlighting the urgent need for healthcare
resources. With the emergence of new virus variants, the demand for healthcare
facilities surged, exacerbating shortages of essential drugs and equipment. Initially, as
no definitive treatment existed, countries explored alternative medications like
remdesivir and lopinavir, repurposed from Ebola and HIV treatments, respectively.
However, the limited effectiveness of these drugs and their scarcity led to widespread
shortages. India, in particular, faced acute shortages of remdesivir, which was mainly
imported due to patent restrictions. Moreover, the urgent need for oxygen in hospitals
further strained healthcare systems, especially in India, where oxygen shortages
resulted in numerous fatalities. While vaccine development offered hope, most
vaccines were produced by European and American companies, prioritizing domestic
distribution. The World Health Organization (WHO) emphasized the importance of
global collaboration to ensure equitable vaccine access. India, a major vaccine
manufacturer, struggled to meet domestic and international demands, compounded by
regulatory constraints and limited production licenses. Despite having its vaccine
candidates, bureaucratic hurdles slowed production, hampering efforts to contain the
virus's spread. In response to these challenges, calls intensified for patent revocations
and compulsory licensing to expedite vaccine production and ensure accessibility.
Compulsory licensing would enable multiple companies to manufacture vaccines,
significantly increasing production capacity and addressing global shortages. The
Supreme Court of India also raised questions about the feasibility of compulsory
licensing, urging government action. India could have invoked Section 92 of the
Patents Act, 1970, aligning with TRIPS flexibilities, to issue compulsory licenses.
Furthermore, India and South Africa proposed a waiver of patent provisions at the
WTO in November 2020, yet faced resistance due to international pressure. The
pandemic underscored the conflict between intellectual property protection and public
health imperatives. While intellectual property rights are essential, preserving life and
health rights takes precedence. Despite progress in vaccine availability, many regions
still lag behind in vaccination efforts, exacerbating health and economic disparities. In

89
light of these challenges, governments must consider utilizing TRIPS flexibilities to
ensure equitable access to vaccines and medicines. Failure to do so risks prolonging
the pandemic's impact and exacerbating global inequities.143

5.9 Compulsory Licensing for Green Technology

Climate change affects every corner of the globe, driven primarily by

increasing human activity. The rapid industrial and technological advancements of the
20th century have caused significant environmental damage, particularly through the
release of greenhouse gases (GHGs), contributing to global warming. To address this,
there is a need for the judicious use of technical knowledge and investment in
research and development of environmentally sound technologies (ESTs).
Encouraging innovation, promoting distribution, and facilitating technology transfer
are essential for the widespread adoption of ESTs. Developing nations, especially
vulnerable to the effects of climate change due to limited resources, require assistance
from industrialized countries in accessing green technologies. Compulsory licensing
has been discussed as a potential strategy for promoting the diffusion of ESTs, similar
to the Doha Declaration's provisions for exporting patented drugs to least developed
countries (LDCs) for public health reasons. This mechanism could facilitate the
transmission and diffusion of green technology, particularly in regions lacking
industrial capacity.144

High prices of green technology pose a significant barrier to adoption,

especially for low and middle-income countries. Weakening intellectual property
rights (IPRs) for green technology diffusion has gained support as a solution.
Compulsory licensing is seen as an effective tool, aligned with TRIPS provisions for
technology transfer. It would enable countries to bypass patents and create generic
copies of technologies, similar to pharmaceuticals, facilitating broader access.145

143
In Re: Distribution Of Essential Supplies And Services During Pandemic, In The Supreme Court Of
India Civil Original Jurisdiction Suo Motu Writ Petition (Civil) No. 3 of 2021.
144
Guillaume Henry, "Intellectual Property Rights and Green Technologies," presented at the 42nd
World Congress of the International Association for the Protection of Intellectual Property (AIPPI),
2010.
145
Kuei-Jung Ni, "Legal Aspects (Barriers) of Granting Compulsory Licenses for Clean Technologies
in Light of WTO/TRIPS Rules: Promise or Mirage?," (2015) World Trade Review 14: 4, pp. 701-702.

90
5.10 Compulsory License and Access to Seeds

In agrarian economies like India, where agriculture is a primary source of

income, access to high-quality seeds plays a crucial role in determining farmers'
yields and incomes. However, multinational agricultural research companies often
control the prices of genetically modified (GM) seeds, making them unaffordable for
farmers in developing and least developed countries. To address this, the Protection of
Plant Varieties and Farmers' Rights Act of 2001 allows for compulsory licensing of
seeds or propagating materials if they fail to meet public requirements or are not
available at affordable prices. In 2016, the Andhra Pradesh Government requested
compulsory licensing or revocation of patents for Bt cotton technology due to
accusations of patent abuse and exorbitant royalty charges by the US-based
agriculture firm Monsanto. In response, the Indian government issued guidelines
mandating technology developers to grant licenses for GM traits within a specified
timeframe and at fair and reasonable rates. However, industry backlash led to the
withdrawal of the order, highlighting the influence of global seed corporations.
Despite the setback, the government's initiative underscored its commitment to
ensuring access to quality seeds and advancing farmer welfare. It served as a warning
to multinational corporations that compulsory licenses may be granted if seeds are not
affordable or fail to meet public requirements.146

146
Rishi R. Gupta, "Compulsory Licensing in TRIPS: Chinese and Indian Comparative Advantage in
the Manufacture and Exportation of Green Technologies," (2012) Sustainable Development Law &
Policy 12, no. 3, p. 21.

91
5.11 CONCLUSION

The above analysis demonstrates the crucial role of compulsory licenses in

addressing the socio-economic and political needs of developing countries.
Compulsory licensing proves essential in various aspects, from ensuring access to
technologies to safeguarding the fundamental right to health. Contrary to arguments
from developed nations, which often lack substantial evidence, compulsory licensing
emerges as a versatile tool capable of meeting diverse requirements of developing
nations. While developed nations often cite concerns about compulsory licensing
deterring foreign direct investment (FDI), there is insufficient evidence to
conclusively support this claim. Many other factors influence FDI, and compulsory
licensing may not necessarily be detrimental to it. Additionally, compulsory licensing
is vital for promoting technology transfer, especially when patent holders refuse to
license their patents on reasonable terms. It facilitates dissemination of technology,
which is crucial for the technological advancement of developing countries.

Moreover, compulsory licensing can aid in achieving sustainable development

goals by promoting the spread of green technologies to mitigate environmental
damage and addressing concerns related to food security. Local working of patented
inventions, a provision often associated with compulsory licensing, plays a significant
role in technology transfer and capacity building. Companies are incentivized to set
up industries locally, share crucial technological data, and engage in research and
development activities, leading to technological advancements and skill development.
Overall, compulsory licensing emerges as a powerful tool for protecting public health,
promoting sustainable development, and fostering technological innovation and
diffusion in developing countries.

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 CHAPTER 6

CONCLUSION AND SUGGESTION

Research always aims to address prevailing societal problems by focusing on

specific areas of inquiry and proposing solutions. The primary task of any research
endeavor is to delve into a specific area, examine the associated issues, and draw
conclusions based on available data, ultimately offering suitable recommendations.
The fundamental objective of research is to provide mechanisms for resolving
existing problems in the respective area. Therefore, every research endeavor entails
formulating mechanisms to address prevailing issues.

The present research is no exception, as it aims to explore defined objectives

and test hypotheses based on available data. It seeks to draw appropriate conclusions
and offer recommendations in line with its objectives. The initial stages of research
involve formulating the research problem, setting objectives, and hypotheses.
Ultimately, the research concludes with drawing conclusions and making
recommendations. Thus, the concluding chapter becomes the most important and
operational part of the research, encapsulating the entire study's essence.

This chapter serves as the crux of the entire research endeavor, where
conclusions are drawn and recommendations are provided based on the study's
analysis. In this chapter, the researcher presents conclusions derived from the analysis
conducted in various preceding chapters and offers recommendations aimed at
resolving prevailing issues in the area under study.

As discussed earlier in this thesis, intellectual property rights (IPR) have

become increasingly dominant across various aspects of life, impacting society and
individuals significantly. In this context, the study of compulsory licensing holds great
importance as it serves to check potential misuse of IP rights by holders, thereby
having a significant impact on present and future scenarios.

Aligned with the objectives set at the outset, this study has been conducted
following established research norms. In the post-WTO era, the IPR regime has
witnessed significant growth worldwide. The researcher has framed research norms,
objectives, and goals, formulated hypotheses, collected and analysed data using both
93
doctrinal and non-doctrinal methods. The study has now reached its final stage, where
conclusions are drawn, and recommendations are made to ensure the study's
fruitfulness. The conclusion and recommendations serve as the functional aspects of
the research, reflecting its essence.

In the global discourse on intellectual property rights (IPRs), compulsory

licensing has emerged as a contentious issue, particularly in the context of access to
essential goods and services. This paper aims to analyse the historical evolution, legal
frameworks, and practical implications of compulsory licensing, with a focus on its
role in promoting public welfare while respecting the rights of intellectual property
(IP) holders. Through a systematic examination of legal principles, international
agreements, and case studies, this study seeks to explore the complex interplay
between IP protection and societal obligations, shedding light on the debate between
developed and developing nations regarding the use of compulsory licenses.

India, influenced by its colonial past, incorporated compulsory licensing

provisions into its domestic IP legislation, recognizing the need to balance innovation
and public access to essential technologies. However, the implementation of product
patents in pharmaceuticals under the TRIPS Agreement posed challenges for
developing countries, leading to debates on the role of compulsory licensing in
promoting equitable access to medicines.

International agreements such as the TRIPS Agreement and the Berne

Convention have shaped the legal landscape of compulsory licensing, albeit with
varying degrees of flexibility for developing countries. While these agreements
provide mechanisms for addressing public health concerns and promoting
technological innovation, they also impose constraints on the use of compulsory
licenses, reflecting the interests of developed nations. National legislation, such as
India's Patent Act, has sought to strike a balance between IP protection and public
interest, recognizing the need for safeguards against IP abuse.

Despite the theoretical framework supporting compulsory licensing as a tool

for promoting public welfare, its practical implementation has faced numerous
challenges. Developed countries, wary of potential economic implications, have often
resorted to trade sanctions and coercive measures to discourage the use of compulsory
licenses by developing nations. Moreover, ambiguity in legal terminology and

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procedural complexities have hindered the effective utilization of compulsory
licensing provisions, limiting their impact on access to essential goods and services.

Analysis of case studies, including India's experience with compulsory

licensing in the pharmaceutical sector, highlights both the successes and limitations of
this mechanism in addressing public health needs. While compulsory licensing has
facilitated access to affordable medicines in certain contexts, its broader application
has been constrained by political and economic factors. Policy implications suggest
the need for clarifying legal frameworks, enhancing transparency in decision-making
processes, and fostering international cooperation to address global health challenges.

compulsory licensing represents a critical tool for balancing IP rights and

public interest, particularly in the context of access to essential goods and services.
While challenges persist in its implementation, the evolving legal and policy
landscape offers opportunities for leveraging compulsory licensing to promote
innovation, equity, and social welfare. By fostering dialogue and collaboration among
stakeholders, governments can harness the potential of compulsory licensing to
address pressing global challenges, including the ongoing COVID-19 pandemic.

After thorough evaluation, exploration, investigation, analysis, and

examination of the data, thoughts, theories, and statistics referenced throughout this
research endeavor, several conclusions emerge:

1. The intellectual property rights (IPR) regime stands on a solid foundation of

jurisprudential ideology, representing a delicate balance between various stakeholders.
It serves as the best compromise between creators, producers, and consumers,
ensuring equitable rights distribution.

2. The IPR regime, primarily motivated by economic and technological

advancements, carries the risk of potential misuse of monopoly rights granted to
individuals. While these rights incentivize creation, research, and development, they
are not absolute. Compulsory licensing provisions serve as essential instruments to
prevent such misuse, ensuring societal interests are prioritized.

3. Compulsory licensing, with its long history and development, has been tested and
proven effective. Its justification and rationality in legal frameworks are evident,
making it a vital provision within the realm of IPR.

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4. India's legal mechanism surrounding compulsory licensing is robust, incorporating
measures to address domestic and international challenges. The Indian legal system
effectively safeguards national and community interests through its provisions.

5. Socio-legal studies confirm the increasing awareness of IPR among various

stakeholders. The ground reality reflects the satisfactory outcome of doctrinal
research, indicating alignment between theoretical frameworks and practical
applications.

6. The evolving market competition and judicial decisions have brought new
dimensions to the subject. India must assertively safeguard its national interests in
light of these developments.

Additionally, it is evident that there is a lack of comprehensive and universal

policy documents at the international level, leading to disparities in compulsory
licensing standards. Recommendations are crucial in addressing these conclusions and
proposing actionable steps to overcome challenges such as biomedical waste hazards.
Without such recommendations, the application of research findings remains
incomplete and lacks societal relevance. Therefore, the researcher proposes actionable
recommendations based on the investigative findings, aiming to address the identified
issues effectively.

SUGGESTION:

1. Entrusting the jurisdiction to grant compulsory licenses for patented medications to

the Competition Commission of India (CCI) in India would help curb anti-
competitive practices by multinational corporations exploiting intellectual property
rights.

2. Implementing a transparent policy regarding expenditure on research and

development by the Indian government is essential to ensure fair pricing of new
medications. This policy would prevent unjust enrichment at the expense of patients
by obligating corporations to reduce profit margins, thus aiding in determining the
necessity for compulsory licensing.

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3. India should lead efforts to unite third-world countries in advocating for
amendments to provisions granting equal protection to all types of inventions.
Recognizing that different patents have varying implications on society and the
economy, equal patent protection should be reconsidered.

4. India should refrain from granting any form of data exclusivity for essential life-
saving drugs to best serve societal and national interests.

5. The World Trade Organization (WTO) should consider establishing a body to

monitor TRIPS-Plus agreements, ensuring they align with the social welfare
requirements of TRIPS and the principles of the Doha Declaration.

6. Prior to entering into free trade agreements, the Indian government should engage
in a democratic process, publicly disclose negotiation documents, and include
representatives from all sectors in the negotiation process. Approval of any FTA
should be contingent upon addressing concerns about pharmaceutical access.

7. Reconsidering the decision to allow 100% foreign direct investment (FDI) in the
pharmaceutical industry through the automatic route and implementing constraints
recommended by the Maira Committee on FDI in the pharmaceutical sector are
imperative.

8. Establishing stringent inventive step criteria in the Patents Act of 1970 would serve
as a proactive measure to prevent patent system abuse and align with public health
objectives, reducing the need for countries to expend unnecessary political capital on
issuing compulsory licenses retrospectively.

9. Developing royalty guidelines and compensation calculation formulas tailored to

Indian conditions would be feasible for businesses and aid in ensuring fair
compensation.

10. Conducting a survey of out-of-print books and literary materials protected by

copyright and initiating compulsory licenses for their reproduction is necessary.
Additionally, addressing cartels and syndicates in the publishing and production
industries is crucial to prevent monopolistic practices and inflated prices of
copyrighted materials.

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11. Defining ambiguous terms and interpretations found in TRIPS, international
agreements, national legislations, and treaties is essential to clarify their meanings and
facilitate the implementation of the compulsory licensing system.

12. Strengthening the IPR regime in India is imperative given its solid foundation and
the nation's robust scientific and technological development. As India aspires to
become an economic superpower, further development in the IPR regime will be
instrumental in bolstering the national economy. The existing balance between IPR
rights holders and government rights must be maintained.

13. Establishing a National Office tasked with monitoring IP regulation in India,

reporting directly to ministerial-level officers, would facilitate proactive measures to
address IP rights use and misuse. Present laws necessitate government intervention
only upon request, highlighting the need for proactive monitoring.

14. Prioritizing national interests within the IPR system is essential, especially in post-
WTO phases where multinational companies' interests often overshadow societal
concerns. India must assess its own IPR strength to prevent instances like the
misappropriation of traditional knowledge, such as Neem and turmeric.

15. Simplifying the legal mechanism for issuing compulsory licenses is

recommended, along with addressing unresolved issues, particularly regarding royalty
fixation. Transparency and clarity in the compulsory licensing process are essential,
necessitating audits and economic evaluations of patents and copyrighted works.

16. Increasing awareness of the IPR regime and compulsory licensing among society
through educational initiatives and training programs is crucial. A well-informed
populace is better equipped to respond to IPR-related challenges, ensuring vigilant
protection of rights and privileges.

17. India must adopt a progressive approach to address emerging challenges and
protect intellectual property, including software, business methods, and domain
names. Coordination with other countries on regulatory standards is essential for
effective global governance of electronic commerce.

These recommendations aim to address challenges in bio-medical waste

management, particularly in the NCR region. While not exhaustive, they represent
crucial steps toward improving the implementation of compulsory licensing within the

98
IPR framework. The researcher acknowledges that further action is needed to bridge
the gap between theoretical frameworks and practical realities, emphasizing the
importance of commitment and determination in effecting meaningful change.
Ultimately, the researcher underscores the primacy of humanity, human rights, and
societal welfare in navigating the complex landscape of intellectual property rights.

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DOCUMENTS AND REPORTS

• Agreement on Trade-Related Aspects of Intellectual Property Rights

• Declaration on the TRIPS agreement and public health (WT/MIN(01)/DEC/2)
• Paris Convention for the Protection of Industrial Property, 1883
• The International Convention for the Protection of Literary and Artistic Works,
1886
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• The Copyright Act, 1957
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Shri Justice N. Rajgopala Ayyangar, (Ministry of Commerce and Industry,
1959)
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Phonograms and Broadcasting Organisations, 1961
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WEBSITES

www.dipp.nic.in
www.ipab.tn.nic.in
www.manuptra.com
www.pharmabiz.com
www.pharmaceuticals.gov.in
www.planningcommission.ni
www.undp.org
www.unicef.org
www.who.int www.wipo.int
www.wto.org

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