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What is Compulsory Licensing?

Topics Covered: IP related issues.

What is Compulsory Licensing?

A compulsory licence is a licence or authorisation issued by the government to an applicant for making, using and selling a patented product or employing a patented process without the consent of the patentee.

Chapter XVI of the Indian Patents Act 1970 and the Agreement on Trade-Related Aspects of Intellectual Property Rights discuss compulsory licensing.

  • The application for compulsory license can be made any time after 3 years from date of sealing of a patent.

The following conditions should be fulfilled by the applicant:

  1. Reasonable requirements of the public with respect to the patented invention have not been satisfied;
  2. Patented invention is not available to the public at a reasonably affordable price.
  3. Patented invention is not used in India.

Additionally, according to Section 92 of the Act, compulsory licenses can also be issued suo motu by the Controller of Patents pursuant to a notification issued by the Central Government if there is either a “national emergency” or “extreme urgency” or in cases of “public non-commercial use”.

When was the first license issued?

India’s first ever compulsory license was granted by the Patent Office on March 9, 2012, to Hyderabad-based Natco Pharma for the production of generic version of Bayer’s Nexavar, an anti-cancer agent used in the treatment of liver and kidney cancer.

Global Perspective on Compulsory Licensing:

This phenomenon of compulsory licensing is a hugely debated issue. Many developing countries are giving importance to the compulsory licensing because of the unavailability and unaffordability of the medicines, and they are continuously granting more and more compulsory licenses. The developed countries of Europe, USA are opposing this view as it would make innovation difficult for the pharmaceutical companies.

Why compulsory licensing is in News?

Issue compulsory licences for manufacture of an affordable generic version of Remdesivir, CPI(M) tells govt.

  • It said the government should invoke Clause 92 of the Patent Act that allows it to issue compulsory licences so that Indian manufacturers can produce a more affordable generic version.

Need for:

Gilead Sciences’ anti-viral drug Remdesivir has shown efficacy in treating COVID-19 patients.

  • Media reports indicate that the U.S., which is hoarding all drugs found to be useful in combating the pandemic, has bought the entire stock of Remdesivir from Gilead for the next three months.
  • It will therefore not be available for the rest of the world.

Besides, while the cost of manufacturing Remdesivir for a full course — as worked out by experts — is less than $10 or ₹750 in the U.S. And about ₹100 in India. Gilead, by virtue of its patent monopoly, is holding the world to ransom by asking a price that is hundreds of times its cost.

Present scenario:

Given the uncertainty over access to treatments for COVID-19, several countries have been laying the legislative groundwork to issue compulsory licenses for products that patent holders refuse to make accessible.


Prelims Link:

  1. What is a patent?
  2. What is CL? Provisions under which it is issued?
  3. Who can apply for a CL?
  4. Conditions under which a CL can be granted.
  5. Remdesivir is used for?
  6. What are generic medicines? what is TRIPS Agreement?

Mains Link:

What do you understand by compulsory licensing? Discuss the related provisions.

Sources: the Hindu.