Compulsory licenses are authorizations issued by the Controller General to a third party for the manufacture, use, or sale of a specific product or for the use of a particular process that has been patented without the patent owner's permission being necessary. This definition is known both nationally and globally, with both the (Indian) Patent Act, 1970, and the TRIPS Agreement expressly referencing it. Any pre-requisite requirements, set out in sections 84-92, need to be met if a compulsory license is to be given to anyone. In accordance with Section 84, any person, irrespective of whether he is the holder of the patent's license, may, upon expiry of three years, apply to the controller for the grant of a compulsory license, provided that any of the following conditions are fulfilled-
Furthermore, in accordance with section 92, compulsory licenses can also be granted suo motu by the controller, pursuant to a notification issued by the central government, where either 'national emergency' or 'serious urgency' occurs or 'public non-commercial use' occurs. A variety of additional considerations are taken into account by the controller, such as the essence of the invention, the ability of the applicant to use the product for public gain, and reasonableness, but the applicant has the sole discretion to issue the obligatory license. Even after a compulsory license has been issued to a third party, the proprietor of the patent still has patent rights, including the right to be paid for copies of the goods produced under the compulsory license.
On 9 March 2012, the Patent Office granted India's first-ever compulsory license to Natco Pharma for the generic development of Bayer Corporation's Nexavar, a life-saving drug used for the treatment of liver and kidney cancer. Bayers marketed this medication at exorbitant prices, costing about Rs 2.8 Lakh for one month's worth of dosage. Natco Pharma offered to sell it for Rs 9000, making it affordable for individuals belonging to each class. All three of the conditions laid down in section 84 were met and the decision was made for the benefit of the general public.
The compulsory licensing clause must be used judiciously since it represents an exception and flexibility to the general patent law. The clause provides neither full patent protection nor does it deny that it directly affects the financing of innovation and the unfettered use of this provision will contribute to multinational pharmaceutical firms hesitating to launch new medicinal products in other countries. Therefore, if businesses want to shield their product from compulsory licensing, they have to set the cost of their proprietary module according to the country's economic status. Owing to the economic situation of the majority population, India needs this provision. But the difficulty is that it must, on the one side, comply with international patent rights requirements and, on the other, safeguard public health.
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