HomeBlogOpinionCompulsory Licensing of Patents : A Critical Evaluation

Compulsory Licensing of Patents : A Critical Evaluation

[Editor’s Note: A packet containing 120 tablets (to be consumed within a month) of the Cancer Treatment Drug (‘Nexavar’) cost Rs. 2.84 Lakhs previously. But after a recent decision by Indian Patents Office, the price has got reduced to Rs. 8800 per month. This article by Jos Anthony explains how the Application of Patent Law in India brought about this dramatic change.]

The desicion of the Indian Patent Office chaired by The Controller General of Patents, P. H. Kurian to permit generic drug manufacturer Natco Pharma Ltd to make and sell an anti cancer drug by the name Nexavar patented by a Geraman Pharma giant Bayer healthcare has attracted a lot of accolades and a  spoon full  of criticism recently.

This can definitely be considered as a very prudent move from the view of a layman. After taking a quick glance at the GDP and income statistics of the people of India, the mere fact that such booming prices persisted for life saving drugs in India makes one apparently realize the lackadaisical attitude of the administrative authorities towards the welfare of people.

When many people consider the recent judgment  as a blessing , the presence of a section of populace which has marked their vehement protest over the same shall not go unnoticed.In this article, my humble attempt is to give a brief sketch of the compulsory licensing procedure , the much relevant section 84 of the Indian Patents Act and comprehensively conclude as to whether the merits of compulsory licencing shall outweigh the so called demerits.

What is a Compulsory Licence?

A compulsory licence is a contract involuntary in nature that is imposed on a patentee to grant the permission to a third party to manufacture and sell the patented article.

The legal provision for this can be found in Sec 84 of the Indian Patents Act. But this step can be taken and stands justifiable only when it satisfies three requisites as contemplated in the section;

(a) reasonable requirements of the public with respect to the patented invention have not been satisfied

(b) patented invention is not available to the public at a reasonably affordable price

(c) patented invention is not worked in the territory of India

In the event of any of these conditions being fulfilled, the Controller may grant the licence. But in the case of Natco v Bayer, it can be easily figured out that all the three conditions have been met with and this may be the vital reason behind the expeditious passage of the judgment.

Object of Section 84 of Indian Patents Act

The main objective of Sec 84 of the Indian Patents Act is to prevent the abuse of patent as a monopoly and to cut way for the commercial exploitation of an invention by an interested person. In addition to the three conditions mentioned above, subsection 6 of sec 84 enunciates the key factors which the Controller has to notice while considering the application-

a) The nature of the invention, the time which has elapsed since the sealing of the patent and the measures already taken by the patent or licensee to make full use of the invention;

b) The ability of the applicant to work the invention to the public advantage;

c) The capacity of the applicant to undertake the risk in providing capital and working the invention, if the application were granted

Nexavar by Bayer

By the judgment of the Indian Patent Office, it is expected that the kidney and liver cancer drug Sorafneib tosylate (Nexavar) will be available in the market to parties at Rs. 8800 ( a packet of 120 tablets) previously sold at an exorbitant price of Rs 2.84 lakhs. The drug serves effectively in the treatment at the advanced levels of kidney and liver cancer helping stop the growth of new blood vessels and other cellular growth factors. Though it cannot be deemed a life saving drug, there is no issue calling it a life extending drug.

As per the order, Natco will have to supply-

a)  the drug free of cost to atleast 600 people per year and also

b) pay royalty to Bayer at the rate of 6 % of the net sales on a quarterly basis.

It was also notified that the license shall be valid for the balance period of the patent.


Patent law has been enacted to encourage innovation, technical advancement, technological progress, transfer of technology and thereby ultimately attain the common cause of development. Innovative drugs are more expensive than generic medicines.The reason for this can be attributed to the complex processes which are required to make the invention. It may be after thousands of trials in several permutations and combinations that a molecule reaches the market and then to the patients. Hence there is no wonder for it being a tedious process witnessing a lot of monetary funding for extensive clinical trials and experiments.

Grant of compulsory licences should never compromise with the future investments in the pharmaceutical sector. Soon after India became a signatory to the TRIPS agreement and realigned its Patent Act compliant to TRIPS, the sector has grown in leaps and bounds. It has really become an area of unprecedented growth and has served as an impetus for collaboration of foreign and Indian Companies.

But if this trend of compulsory licence gains momentum, it may very well have several detrimental impacts on FDI in this sector further putting India down the line of economic prosperity.

But what is the purpose of having a wealthy country without any healthy people?


In my opinion, an analyzable conclusion could be as follows:

Granting compulsory licence can now be never kept at bay for people has known its sweet taste..so the only plausible alternative is to make the royalties paid to the patentee such that it does not drain the interests of pharma players to play in India. The government should make effective policies and rules that can an orchestrate to a harmonious tune the cries of both the patients and the big pharma players…..only a well synchronised rule can help this happen..

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