Compulsory Licensing is an authorization given to a person to use a patented invention without any permission from the patent holder of that invention. It is a boon for all the under-developed and developing countries, but the developed countries are against it. The reason is that the under-developed and developing countries do not have enough revenue to fund research; therefore, they favor a compulsory licensing regime. Whereas it is completely the opposite in the case of developed countries; the reason they are against it is that they spend a lot of money and effort on innovation.

In India, compulsory licensing is governed by the Indian Patents Act, 1970 under Section 84 to 94. These sections lay out the circumstances under which a compulsory license can be granted, the powers of the Controller to grant a compulsory license, or to terminate one, already granted.

Though the developed countries and Big Pharma companies are against compulsory licenses there are many such licenses being granted all around the world. India had taken its first step in the year 2012 by granting a compulsory license to Natco Pharma for selling a generic version of Bayer Corporation’s patented drug “Nexavar” prescribed for treating liver and kidney cancer. In this case, all the conditions to grant a compulsory license laid by the Indian Patents Act, 1970 was fulfilled. As against Nexavar which cost ₹2.84 Lakh for a monthly dose, the licensee had undertaken to sell the drug at ₹8,880/- for a month, making it available to all the sections of the society. This was one of the multiple reasons cited by the Controller for granting the compulsory license in this particular case. Natco Pharma was ordered to pay royalties at the rate of 6% of total sales per quarter by the Controller as per the guidelines given by the United Nations Development Programme (UNDP). Later when Bayer challenged the decision of granting Compulsory License in front of IPAB, the royalties were increased to 7%

In recent times, Russia has also made amendments to its legal policy and the latest legislative framework allows its pharmaceutical companies to get a compulsory license for a patented drug. In India, the power to grant a compulsory license is given to the Controller of Patents whereas in Russia it is with the courts. Russian courts have an exclusive power to issue a compulsory license to their pharmaceutical companies provided that the patent holder is not using the invention. Giving the power to grant a Compulsory License to the judiciary may prove to be an advantageous step, considering that judicial arms of States are immune to the diplomatic requests made by the developed nations, unlike the executive which may succumb to international pressure. It may also save a lot of time that the Controllers of Patents spend in considering such requests, which instead can be invested in their primary duty, i.e., granting new patents. A Judiciary led process may also prove to be more fair and efficient. Thus, other developing countries, including India, may consider adopting such a regime.

In June 2018, the Arbitration Court of Moscow fulfilled a request made by a pharmaceutical company called “Nativa” and granted a license to use a patented drug of the American Corporation “Celgene” in connection with a drug named “Lenalidomide-Nativ”. It is a drug used for treating leprosy, tuberculosis, AIDS, and multiple myeloma. Compulsory Licensing is a gift given to man by man. Though most of the world has started granting Compulsory Licenses, not many of them are issued by any country. Now that Russia has started granting compulsory licenses to its pharmaceutical companies, it should be treated as a push to the engine by all the other countries including India and they should start granting more compulsory licenses all over the world, at least in the field of medicine, so that healthcare, being a basic human right is made available to all the sections of the society.

Author: M. Sai Krupa, Intern at Global Patent Filing. In case of any queries please contact/write back to us at support@globalpatentfiling.com.