Compulsory licencing is when a government permits another party to manufacture a patented product or process without the patent owner's approval or intends to use the patent-protected invention itself. It is one of the patent flexibilities contained in the WTO's TRIPS (Trade-Related Aspects of Intellectual Property Rights) Agreement.
The TRIPS Agreement does not specify the grounds for justifying compulsory licencing. The Doha Declaration on TRIPS and Public Health, on the other hand, confirms that governments are free to establish the grounds for granting compulsory licences and what constitutes a national emergency.
Thus, compulsory licencing aims to prohibit a patent holder's abuse of patent rights. The policy is in the interest of public health or anti-competitive behaviour that might result in trade restrictions or technology transfer impediments.
India and Compulsory Licensing
Several provisions remedy misuse of patents rights and provide the legal framework to the Office of DPIIT generally known as the “Indian Patent Office” to grant a compulsory licence to a third party. For example, under Indian Patent Laws, compulsory licencing may be given three years following the issuance of a patent. Additionally, the Indian Patent Office may issue a compulsory licence only if the patentee's use of the patented product does not meet public requirements, the patented product is not reasonably accessible to the public, or the patentee has not worked on the patented product in India. In other words, compulsory licences will be imposed only when a patent owner fails to use – or fails to exploit sufficiently – an innovation that could be extremely advantageous to the public interest.
However, Indian patent law requires that a variety of conditions be considered while determining whether to give a compulsory licence to a third party, i.e., the applicant for the compulsory licence. The Indian Patent Office considers a variety of factors, including whether the third party has approached the patent owner for a licence, whether the third party possesses the capability to manufacture the patented product in the public interest, and the actual nature of the invention and its benefits to the public.
While patents promote monopoly and overpricing, they are a necessary evil because enterprises would have no motivation to innovate new products without patent protection. Thus, patent protection is required to assure innovation; the patent is a flawed but valuable tool for promoting the invention of new items.
Pharmaceutical patent protection, on the other hand, works best in high-income countries with populations who can afford pricey patented drugs. It does not operate effectively in underdeveloped and least developed countries for a variety of reasons, the most important of which is inexpensive access to medicines. Thus, compulsory licencing is another necessary evil. This is a violation of the patent holder's rights. However, this infringement is occasionally important to prevent the abuse of monopoly rights and to defend the human right to health.
Compulsory licencing is a highly contentious issue at the worldwide level. Representatives of developing countries and non-governmental groups express worry that strict patent laws will obstruct access to life-saving medications.
On the other hand some believe that failing to safeguard IPRs may impede access to health care, as the monopoly afforded to pharmaceutical corporations by patent protection enables them to recoup research and development costs and fund additional research and development projects.
India in this regard has adopted a pragmatic and practical approach by having a safeguard mechanism in place that lays down required checks for granting compulsory licensing.