In the Indian legal system, patent licenses are established through formal agreements known as patent licensing agreements. The specific terms of these agreements can be tailored to meet the needs of both the patent holder and the interested party. The governing legislation for patents and their associated licenses in India is the Patents Act of 1970. It's important to seek the guidance of a qualified patent attorney before finalizing any patent licensing deals to ensure all aspects are addressed comprehensively. A patent grants the owner exclusive rights over a particular invention . This essentially means that the patent holder has the legal authority to prevent others from commercially exploiting the invention. Commercial exploitation, in this context, refers to any activity that involves the manufacturing, use, distribution, import, or sale of the patented invention for commercial purposes, and can only be undertaken by the patent holder or a party authorized by them. When a patent holder grants a license, they are essentially authorizing another party, known as the licensee, to exploit the patent in a specific manner. The scope of this authorization can be defined in the agreement to encompass a certain timeframe, a particular purpose for using the invention, or a specific territory where the license is valid. It's important to note that the licensing period cannot extend beyond the duration of the patent itself, as determined by the government. The specific details of a patent licensing agreement are ultimately determined by what best suits the interests of both the licensor (the patent holder) and the licensee.

The Patents Act of 1970 serves as the legal foundation for patents and patent licenses in India. This blog post delves deeper into the concept of patent licensing within the Indian legal framework, exploring the intricacies involved in this process.

KINDS OF PATENT LICENSES

1. EXCLUSIVE PATENT LICENSE

An exclusive patent license grants the licensee the sole right to exploit the patented invention. This doesn't mean ownership of the patent itself transfers from the licensor (patent holder) to the licensee. It's more like granting exclusive access to a perk, not giving away the whole package. The licensee has the sole authority to make, use, sell, import, or distribute the patented invention within the agreed-upon terms. No one else, including the licensor, can exploit the invention in that specific way during the license period. Although the licensee gets exclusive rights, the legal title to the patent stays with the licensor. The licensee cannot further grant this exclusive right to someone else (sub-licensing). It's a one-on-one deal between the licensor and the licensee.

This type of license is ideal when the licensor wants to completely hand over exploitation rights for a specific period or territory, while still retaining ownership of the patent itself.

2. NON-EXCLUSIVE PATENT LICENSE

A non-exclusive patent license allows the patent holder (licensor) to grant the right to use the invention (exploitation rights) to multiple parties (licensees) at the same time. Unlike exclusive licenses, there's no single licensee with sole control. The licensor retains ownership of the patent, but the licensees gain the freedom to exploit it within the agreed-upon terms.

3. SUB-LICENSE

A sub-license is a permission granted by a licensee (who already has a license from the patent owner) to a third party. This third party then becomes a sub-licensee. However, the ability to sub-license depends on the terms of the original agreement between the patent owner (licensor) and the licensee.

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4. VOLUNTARY LICENSE

A voluntary license is a contractual agreement initiated by the patent holder (licensor) granting exploitation rights to a licensee. This authorization occurs without any legal compulsion or requirement placed on the licensor. While applicable to most patented inventions, voluntary licenses are particularly prevalent within the pharmaceutical industry.

5. COMPULSORY LICENSE

The Indian patent system recognizes a concept called a compulsory license, a mechanism that allows the government to bypass the patent holder's consent and grant licenses to third parties under specific circumstances. This prioritizes public interest over exclusive rights in certain situations. Sections 84 and 92 of the Patents Act, 1970, govern compulsory licensing in India.

A compulsory license application can be filed with the Controller General of Patents by an interested party after three years from the patent grant. Grounds for such an application include:

● Limited Accessibility: If the patented invention fails to meet the "reasonable requirements of the public." This could occur if the invention isn't readily available to those who need it.

● Pricing Concerns: If the patented invention is priced at a level deemed "unreasonably unaffordable" by the public. This ensures essential technologies and products remain accessible.

● Lack of Domestic Activity: If the patented invention isn't being "worked in the territory of India." This encourages local production and technology transfer.

Beyond these grounds, Section 92 empowers the government to directly notify the public about granting compulsory licenses in cases of "national emergency or extreme urgency." This ensures vital technologies are accessible during critical situations.

The landmark case of Bayer Corporation vs. Natco Pharma Ltd. (2019) exemplifies the application of compulsory licenses. Here, a life-saving cancer medication, patented by Bayer, was deemed unaffordable and not reaching a significant portion of the Indian population. Natco, an Indian generic drug manufacturer, was denied a voluntary license by Bayer. Consequently, Natco successfully obtained a compulsory license under Section 84, ensuring broader access to the medication at a more affordable price.Compulsory licensing serves as a safeguard, ensuring that patents granted to promote innovation ultimately benefit the public. If a patent holder fails to make the invention reasonably accessible or affordable, the government can intervene to strike a balance between intellectual property rights and public health needs.

6. CARROT LICENSING

A carrot license is a unique type of patent agreement that offers a limited form of access to the patent holder's knowledge. Unlike traditional licenses, it doesn't grant the licensee the right to manufacture, use, sell, or commercially exploit the patented invention. In essence, the licensor provides technical know-how related to the patent.

7. STICK LICENSING

Stick licensing, a stark contrast to the "carrot" approach, is a method employed by patent holders when they discover someone (the prospective licensee) is already infringing on their patent. The patent owner identifies a party using their patented technology without authorization. This constitutes patent infringement. The licensor, aware of the infringement, can choose to sue the infringer for patent violation.

LICENSING PATENT IN INDIA

Licensing your patent in India unlocks the potential to generate revenue and expand the reach of your invention. A legally binding Patent License Agreement forms the foundation of your licensing deal. As mandated by Section 68 of the Patents Act, this agreement must be a written document outlining all the rights and obligations of both parties (licensor and licensee). Don't rely on verbal agreements or informal term sheets - a clear, written contract is essential.

The agreement should meticulously address several crucial aspects:

● Precise Identification: Clearly define the specific patented invention being licensed.

● Scope of Use: Outline the extent to which the licensee can utilize the invention (e.g., manufacturing, selling, importing).

● Exclusivity or Sharing: Determine if the license is exclusive (licensee has sole rights) or non-exclusive (multiple licensees can use the invention).

● Royalty Structure: Establish a royalty payment plan that defines how the licensee compensates the licensor for using the invention (e.g., fixed fee, percentage of sales).

● Territorial Limits: Specify the geographic region where the license is valid.

● Duration and Termination: Define the license period and the conditions under which it can be terminated.

Once the agreement is finalized, the licensee must take steps to officially register their rights. Section 69 of the Patents Act governs this process. The licensee submits the signed Patent License Agreement along with supporting documentation to the Controller. Upon reviewing the evidence and verifying the licensee's entitlement, the Controller will register them as a proprietor (sole owner) or co-proprietor (shared ownership) of the patent rights within the defined scope of the license.

REVOCATION OF LICENSE FOR NON-COMPLIANCE

The Indian patent system incorporates safeguards to ensure patents are used responsibly and benefit the public. A patent can be revoked if it fails to meet specific criteria:

● Domestic Inactivity: If the patented invention isn't being actively "worked in the territory of India," it can be grounds for revocation. This encourages local production and technology utilization.

● Public Needs Not Met: If the patented invention doesn't fulfill the "reasonable requirements of the public," revocation can occur. This ensures essential technologies are accessible to those who need them.

● Unaffordable Pricing: If the patented invention is priced at a level deemed "unreasonably unaffordable" by the public, revocation becomes a possibility. This promotes affordability of crucial technologies.

The process for revoking a compulsory license granted under Section 84 is outlined in Section 94 and Rule 102(1) of the Patents Act. When the reasons for granting the license no longer exist, the patentee or interested parties can initiate termination through Form 21. However, the licensee has the right to contest this decision.

The Indian government has certain rights regarding patented inventions:

● Government Needs: Section 100 of the Patents Act allows the Central Government and authorized individuals to use a patented invention for government purposes. This ensures access to vital technologies for public benefit.

● Acquisition for Public Interest: Section 102 empowers the Central Government to acquire an invention or patent entirely if deemed necessary for public purposes. The government publishes a notification in the Official Gazette, and ownership rights are transferred. In such cases, the government compensates the inventor with royalties through a mutually agreed-upon arrangement.

These provisions ensure that patents serve the public good. They encourage responsible use of patented inventions while allowing the government to leverage them for national interests and public well-being.

While patent licensing offers exciting possibilities for commercializing your invention, it's important to acknowledge its complexities. Patent licensing can be a great way to bring your invention to market, but it's not without challenges. The legal aspects can be confusing, and getting the best royalty rate requires negotiation skills. A patent attorney can help you understand your rights, negotiate a strong agreement, and ensure its properly registered. Their expertise can save you time, money, and headaches in the long run. By seeking professional guidance, you can approach patent licensing with confidence and maximize the value of your invention.

Author :Rohan Lakma, in case of any query, contact us at Global Patent Filing or write back us via email at support@globalpatentfiling.com.