Facts of the Case
A pharmaceutical company in India filed an application seeking a compulsory licence to manufacture and sell a life-saving patented drug. The patent holder, a multinational pharmaceutical firm, had developed the drug and held exclusive rights under the Indian Patents Act. However, the drug was not made available for sale in the Indian market. The foreign company only manufactured the drug in its facilities abroad and exported it to select markets, excluding India.
The Indian applicant argued that the public in India had no access to the patented drug, and the patent holder was not meeting the reasonable requirements of the Indian public. It further submitted that this non-availability violated the objectives of the Patents Act, which emphasizes both innovation and public health. The applicant therefore requested the grant of a compulsory licence under Section 84 of the Indian Patents Act, 1970.
Issues of the Case
- Can a patented pharmaceutical product be subjected to compulsory licensing merely on the ground of non-working (non-availability) in India?
- Is the export-only manufacturing policy of the patent holder valid under Indian patent law?
- Do the grounds under Section 84 of the Patents Act justify granting a compulsory licence in this situation?
- What constitutes ‘reasonable requirements of the public’ and ‘working the patent in India’ under Indian law?
Principles, Related Case Law, and Legal Framework
The Indian Patents Act, 1970, especially after the 2005 amendment, incorporates TRIPS-compliant provisions with safeguards that balance patent protection with access to medicines.
Section 84 of the Patents Act
This section allows any person to apply for a compulsory licence after three years from the grant of a patent, on one or more of the following grounds:
- The reasonable requirements of the public with respect to the patented invention have not been satisfied;
- The patented invention is not available to the public at a reasonably affordable price;
- The patented invention is not worked in the territory of India.
‘Working the Patent’
As per Indian interpretation, “working” a patent generally implies manufacturing the patented product in India, not merely importing it. This concept strengthens local access and availability. In contrast, TRIPS does not explicitly require local manufacturing, but Indian law interprets it broadly to protect public interest.
Key Precedent: Natco Pharma Ltd. vs. Bayer Corporation (2012)
In this landmark case, the first-ever compulsory licence was granted in India for the cancer drug Nexavar. Bayer, the patent holder, priced the drug at ₹2.8 lakhs per month, while Natco proposed selling it at ₹8,800. The Controller found that:
- The drug was not made sufficiently available to Indian patients,
- It was not manufactured in India,
- It was priced excessively and unaffordable for the average patient.
The compulsory licence was granted to Natco, and the decision was upheld by the Intellectual Property Appellate Board (IPAB) and later by courts.
Judgement and Conclusion
Based on the above principles and precedent, the Indian pharmaceutical company can succeed in its request for a compulsory licence, provided the following are clearly established:
- The patented drug is unavailable in the Indian market either due to non-import or selective export-only practices.
- The patent holder failed to make the drug reasonably affordable or accessible to the Indian public.
- The drug is not “worked” in India, i.e., no local manufacturing or meaningful import is taking place.
Indian patent law prioritizes public interest and access to essential medicines. If a patent holder uses the patent merely to monopolize international markets and neglects Indian patients, it cannot expect complete protection under Indian law. The Indian Patents Act, interpreted in light of Section 84 and public health considerations, clearly empowers the authorities to intervene.
Thus, the Indian company stands a strong chance of success if it proves that the foreign patent holder withheld the drug from Indian markets and did not work the patent domestically. This aligns with the spirit of patent law as a tool for innovation and accessibility, not just for commercial exploitation.
