Purpose for granting compulsory licences (Section 89)

The controller must use his powers to grant a compulsory licence to ensure the
following general objectives:

1. patented inventions are worked on a commercial scale in India's

territory without undue delay and to the fullest extent reasonably
possible; and
2. the interests of anyone currently working on or developing an
invention in India under the protection of a patent are not unfairly
prejudiced.

Compulsory licenses can also be issued suo motu by the Controller under
section 92, 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".
Compulsory licenses may also be granted, when – Section 92 A (1) – To a
country which has insufficient or no manufacturing power in the
pharmaceutical sector to address public health.

Procedure for grant of compulsory licence in case of national emergency

The Controller is satisfied on review of an application for the grant of a
compulsory licence pursuant to a government notification that it is essential in:
(section 92)

1. a situation of national emergency; or

2. a situation of extreme urgency; or
3. a case of public non-commercial use.

Powers of Controller in granting compulsory licences (Section 88)

If the Controller is satisfied on receipt of an application that conditions
imposed by the patentee on the grant of licences under the patent, or on the
purchase, hire, or use of the patented article or process, are prejudicing the
manufacture, use, or sale of materials not protected by the patent, he may,
subject to the provisions of the Patents Act 1970, order the grant of licences
under the patent to such customers of the applicant as he thinks fit, as well as to
the applicant.

India’s first case of granting compulsory license–

Facts:
Bayer Corporation (“Bayer”), the petitioner in this case, a US-
based company, developeda drug to treat patients suffering from kidney and liv
er cancer.
After the drug was
invented in 1999, Bayer applied for a patent in the U.S. and in India in the year
2001.Consequently, Bayer obtained an exclusive right to manufacture, use, lice
nse, and sellthe drug. Natco Pharma Ltd. (“Natco”) approached Bayer to obtain
a voluntary license,which Bayer declined.
Thereafter, Natco applied to the Controller General of Patents,Designs and Tra
demarks (“Controller”) for the grant of compulsory license which was
granted by the Controller in 2011. Aggrieved by this, Bayer filed a petition at t
heIntellectual Property Appellate Board, which also upheld the decision of the
Controller.Finally, Bayer appealed to the Bombay High Court.

Issues:
Did Natco make efforts to obtain a voluntary license from Bayer?
Have the reasonable requirements of the public been satisfied?
Whether the application for compulsory license ought to have been adjourned b
y the Controller?
Was the patented drug available to the general public at a reasonably
affordable price?

Relevant Legal Provisions:

Sections 82, 83, 84, 84(1)(3), 84, and 92A of the Indian Patents Act, 1970

Analysis:
Bayer contended that Natco did not make reasonable efforts to obtain a
voluntary
license. However, the Court did not agree to this contention. The Court conside
red the evidence presented by the parties and
proceeded to note that even after the supply of the drug by Natco, the
reasonable
requirement of the public was not satisfied. The reasonable requirement of the
public
had to be considered by the authorities in the context of number of patients req
uiring the
patented drug. While considering the reasonable requirement of the public,Bay
er contended that the authorities had erred while arriving at the actual
number of
beneficiaries of this drug. The Court did not agree to this and found that the rea
sonable requirement had not been satisfied.

Furthermore, while considering the third issue, Bayer contended that the Contr
oller didnot adjourn the consideration of the application for compulsory license
by Natco.However, this was subject to Bayer working the patent (commercially
) in India and theCourt found that Bayer had not worked the patent in India and
hence found no fault inController’s order. Finally, the Court found that Bayer h
ad recovered its research and
development expenses in one year by which the Court concluded that the cost o
f the drug was not reasonably priced.

In Koninklijke Philips Electronics N.V. vs. Rajesh Bansal and Ors.

In certain cases recently, the Indian courts have ruled that the provision against
anti-competitive practices in the competition act and the provision of
compulsory licensing in the patent act are not in exclusion of each other; in fact
they have to be read conjunctly. The question whether a patentee had adopted
anti-competitive practices could also be considered by the Controller.
However, if CCI has finally found a patentee's conduct to be anti-competitive
and its finding has attained finality, the Controller would also proceed on the
said basis and-on the principle akin to issue estoppel-the patentee would be
estopped from contending to the contrary.

BDR Pharmaceuticals International Pvt Ltd v Bristol-Myers Squibb Co[3]

In BDR Pharmaceuticals the controller rejected BDR’s application for a

compulsory licence (4 March 2013) for the Bristol-Myers Squibb cancer drug
SPRYCEL. The controller rejected the compulsory licence application made by
BDR by stating that BDR had failed to make a prima facie case for the grant of
the compulsory licence. The controller observed that BDR had made no
credible attempt to procure a licence from the patent holder and the applicant
had also not acquired the ability to work the invention to public advantage.
Thus, the request for grant of the compulsory licence was refused.