Compulsory Licensing in India: A Legal Framework for Balancing Patent Rights and Public Needs

May 24, 2025
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Licensing

The patent law domain features compulsory licenses at their core to bridge invention promotion with essential public access to vital products through technology. Under certain public welfare situations the exclusive rights granted through patents become subject to being overridden. The solution becomes available through compulsory licensing at this stage.

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The Indian government maintains a comprehensive legal system regarding compulsory licensing which balances development of local innovation with societal needs particularly in pharmaceuticals and agriculture sectors. Under the framework of compulsory licensing the government along with designated authorities have the power to permit third parties to use and distribute patented inventions through authorization when patent holders resist consent. The authority grants compulsory licenses to defend public welfare alongside making essential products available at reasonable rates and avoiding patent right misuse. The legal basis for compulsory licensing in India exists in the Patents Act of 1970 together with its subsequent adaptations. The blog examines Indian legal rules related to compulsory licensing while analyzing recent market trends alongside present discussions about its practical implementation.

Legal Framework of Compulsory Licensing in India:

. Indian compulsory licensing law exists through Chapter XVI of the Patents Act, 1970 under Sections 84 to 94. Under the Patents Act Section 84-94 the Indian Patent Office specifies the circumstances and protocol for issuing compulsory licenses for third parties to produce and market patented inventions with no need for patent holder consent.

Section 84 lays down the general provisions for the grant of compulsory licenses. According to this section, any “interested person” can apply to the Controller of Patents for a compulsory license after three years from the date of the grant of the patent on the following grounds:

Reasonable Requirements of the Public has not been satisfied: This implies that the patented invention is not available to the public in sufficient quantity or quality or The availability of patented inventions at reasonable prices remains restricted for large portions of the population: A compulsory license becomes valid in this situation. For instance, if a life-saving drug is being produced in limited quantities, hindering access for patients. A compulsory license for Bayer’s cancer drug Nexavar became possible under Natco Pharma Ltd. v. Bayer Corporation (2012) due to Bayer’s elevated drug price. This provision enables manufacturers to work patented products inside Indian territory for national industrial development and job creation. A mandatory permission to produce patented inventions becomes possible only when the inventor fails to work the patent to its full practical potential within India.

Patented Invention Not Worked in the territory of India: This provision aims to ensure that patent holders do not merely import the patented product but also manufacture it within India, contributing to domestic industrialization and employment. If the invention is not being commercially worked in India to the fullest extent reasonably practicable, it can be a ground for compulsory licensing.
Patented Invention Prevents or Hinders the Development of Trade or Industry in India: If the existence of the patent hinders the establishment or development of any trade, industry, or agriculture in India, or prejudices the public interest.

Procedure for Applying for a Compulsory License:

A person who wishes to obain a compulsory license can submit their request to the controller of Patents. Evidence accompanying the application nneds to demonstrate the basis for granting the license. The Controller, after considering the application and hearing the patentee and any other interested parties, may grant the license if the conditions under Section 84 are met. The Controller establishes both terms and payment conditions under a license which extends to the patent holder.

Section 92 empowers the Central Government to issue suo moto (on its own motion) compulsory licenses at any time after the grant of the patent in cases of:

A national emergency provides one way to invoke compulsory licensing while war along with widespread natural disasters qualify as such events.
The copyright provisions apply to critical emergency situations that include public health crises which threaten significant portions of the population.
The government may use patented inventions through public non-commercial channels for governmental operations without seeking profit objectives.

Under Section 92A from 2005 the government has authority to authorize pharmaceutical export compulsory licensing for nations lacking pharmaceutical plants to address their public health needs according to the Doha Declaration.

Conditions for Granting Compulsory Licenses:

The Controller must fulfill these requirements mentioned in the Patents Act, 1970, Section 84(6) and Section 90 when reviewing compulsory license applications. Instead of granting compulsory licenses the Controller carefully considers three main factors:

The designed invention along with the period of patent validity and patentee’s commitment to exploit the invention.
The person who files must show capability to perform public benefit from working the invention.
Whether the applicant has made efforts to obtain a voluntary license from the patent holder on reasonable terms, and such efforts have failed within a reasonable period (generally not exceeding six months). This requirement is waived in cases of national emergency, extreme urgency, public non-commercial use, or anti-competitive practices by the patentee.
The compulsory license issued to a party remains non-assignable together with non-transferable properties.
The scope and duration of the license shall be limited to the purpose for which it was granted.
The patent holder is entitled to receive reasonable royalty, the quantum of which is determined by the Controller.

Recent Trends and Landmark Cases:

Compulsory licensing provisions of Indian patent law have existed since a long time yet their actual use has remained small. The potential use of compulsory licensing receives widespread controversy mainly in public health situations.

When Natco Pharma received a compulsory license in 2012 to make the patented anti-cancer drug Nexavar (Sorafenib Tosylate) developed by Bayer Corporation it marked a major instance of compulsory licensing in India. The implementation of the compulsory license relied on the fact that high drug pricing rendered access limited to patients thus failing reasonable public requirements. The Controller General of Patents established Natco Pharma would receive 6% royalty payments based on their net sales revenue. The Natco Pharma v. As per Bayer Corporation (2012) the section 84 Patents Act compulsory license was granted one single time thus becoming the sole documented instance. The ruling proved that India stands ready to implement Section 84 to maintain the affordability of fundamental medicines.

The Nexavar ruling has been followed by few successful applications of compulsory licenses in India. The possibility of acquiring needed patented technology through a compulsory license serves as an essential tool which India can utilize to address public health emergencies alongside unaffordable technology distribution. BDR Pharmaceuticals and Lee Pharma made failed attempts at obtaining compulsory licenses for their drug products when they applied for SPRYCEL in 2013 and Saxagliptin in 2015 respectively. Such examples demonstrate how strict evaluation procedures and particular criteria must be fulfilled before obtaining a compulsory license approval.

Recent trends indicate a continued debate and cautious approach towards compulsory licensing:

Public discourse about compulsory licensing is taking both supportive and guarded directions according to present-day developments.

Public health matters are the primary field where compulsory licensing shows its greatest potential effectiveness because it applies especially to vital pharmaceuticals and public health crisis treatments. Global discussions on equitable vaccine and treatment access through compulsory licenses intensified because of COVID-19 pandemic events.

The Indian government maintains its dual goal of protecting patent holder rights and ensuring public accessibility of essential medicines. Pharmaceutical innovation receives essential incentives but the government continues to prioritize making essential medicines accessible to the population.

Compulsory license applications at the Indian Patent Office meet demanding requirements by demanding substantial proof that supporting conditions exist for license issuance.

The World Trade Organization-member nation India follows the TRIPS Agreement which allows pharmaceutical compulsory licensing through predefined conditions. India bases its compulsory license approach on prevailing international interpretations of these conditions while TRIPS agreement standards remain under ongoing international dialogue.

The current global healthcare needs, combined with rising health challenges, may lead to intensified inspection of patent measures while making compulsory licensing available for specific necessary situations.

The Ongoing Debate:

A controversial dispute exists between companies that hold patents and those who advocate for public health interests when it comes to compulsory licensing. Patent owners argue that suchandatory authorization for patent use breaks their exclusive control and reduces innovation while leading to reduced research efforts. Supporters of compulsory licensing highlight the importance of low-cost access to vital goods and medicines for persons living in large developing nations facing health problems.

Indian patent law establishes equilibrium through strict rules regarding compulsory licensing together with specific compensation requirements for patent holders. These provisions require proper and transparent application according to individual case details in combination with public welfare needs.

The Impact of Innovation:

People frequently express doubts regarding compulsory licensing’s possible destructive influence on innovation. The use of well-regulated compulsory licensing systems in specific justified cases does not negate the strength of existing patent laws. A properly managed tool for compulsory licensing functions to prevent misuse of patents while making developers more inclined to share their inventions. Local working and technology transfer requirements from compulsory licensing provide the perfect environment for stimulating both indigenous innovation capabilities and manufacturing capacities.

The public interest and exclusive patent rights have always had the potential to conflict with one another. India’s compulsory licensing tries to resolve that conflict. It is rooted in the Patents Act of 1970 and addresses the concern about inaccessible inventions, services, or products in the country’s essential domains such as medicine. An invention is an affordable price, reasonably marketed, and actively being produced in India. Failing those conditions makes the invention non-accessible and thus triggering compulsory licensing.

Even though India has not fully resorted to using this provision a lot, the intellectual properties available to India are crucial in enabling it. Recent patterns point towards emphasis on public health needs as the primary focus whilst granting permits for compulsory licensing under sharp scrutiny. As India balances international obligations and evolving public health issues, systematically controlled compulsory licensing will remain important to innovations that are desperately essential yet highly restricted.

Author: SHREYASHI SINGH, in case of any queries please contact/write back to us via email to [email protected] or at Khurana & Khurana, Advocates and IP Attorney.