COMPULSORY LICENSING

What is compulsory licensing?

Compulsory licensing is a process through which a government allows the local industry to produce drugs under patent protection without the permission of the patent holder. While the global agreement on intellectual property, the Trade Related Intellectual Property Rights (Trips) under the WTO, says that a patent holder will have the sole right to give permission to produce its patented products on payment of a licence fee, flexibilities have been given to countries to address public health concerns by issuing compulsory licenses.

When can a government issue compulsory licences?

These could be issued to address any public health concern as considered appropriate by the issuing country. The Trips Agreement gives a country the freedom to decide when it wants to issue such licenses and it does not necessarily have to be an emergency. It is generally issued for producing life-saving medicines to ensure their availability at low prices.

Does compulsory licensing strip a patent holder off the right to collect license fees on patented products or process?

Not at all. Companies that are issued compulsory licenses to produce a patented product have to pay ‘adequate remuneration’ based on the ‘economic value’ to the patent holder, but there is no elaboration on what the value is.

Why has India not been issuing compulsory licenses? Why has it suddenly woken up to the need?

While the Indian Patents Act provides for issuing of compulsory licenses, the procedural guidelines and the policy framework for the same are not in place. India had been taking it easy so far, as it had a flexible patent regime till 2005, which granted protection only to processes and not the final product. This allowed other producers to manufacture generic versions using a different method. However, ever since there was a switch-over to the more stringent product patent regime in 2005 (under which a patented product cannot be produced through any other process) to meet the country’s commitments under Trips, the country has been facing a shortage of life-saving drugs such as anti-cancer medicines and prices of patented versions have been going up. This prompted the DIPP to float a note on compulsory licensing inviting comments on how the country should go about implementing it.

Can compulsory licenses be issued for exporting to other countries?

Compulsory licenses are generally issued for producing for the domestic market. However, during the Doha ministerial meet in 2001 the WTO recognised that there are countries which do not have manufacturing capacities and allowed such countries to import generic versions from other countries by issuing compulsory licenses