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What is compulsory licensing in patents?

What is compulsory licensing in patents?

23-Oct-2025

Patent

Answer By law4u team

Compulsory licensing in patents is a legal provision that allows the government or a third party to use a patented invention without the consent of the patent holder, under specific conditions, in the public interest. In India, this is governed by the Patents Act, 1970 (not criminal law, so BNS/BNSS do not apply here). Definition of Compulsory Licensing A compulsory license is a license granted by the Controller General of Patents to a third party (not the patent owner), allowing them to produce and sell a patented product or use a patented process without the permission of the patent holder. It is not a theft or violation, but a legal exception allowed under the law to protect public health, national interest, or to counter monopolies. Legal Basis: Patents Act, 1970 (India) Sections 84 to 92 of the Act deal with compulsory licensing. Grounds for Granting Compulsory License \[Section 84] Any person can apply for a compulsory license after 3 years from the date of grant of the patent, on one or more of the following grounds: 1. Reasonable requirements of the public are not being satisfied (e.g., limited supply, hoarding, or monopoly control) 2. The patented invention is not available at an affordable price (especially in essential sectors like medicines or technology) 3. The invention is not being worked in India (i.e., it’s not being manufactured or used to benefit Indian public) Special Provisions – Section 92 The Central Government can also direct compulsory licensing in case of: National emergency Extreme urgency Public health crises (like epidemics or pandemics) In such cases, the waiting period of 3 years is waived, and license can be granted immediately. TRIPS Agreement and Compulsory Licensing India’s compulsory licensing provisions are TRIPS-compliant (Agreement on Trade-Related Aspects of Intellectual Property Rights), especially Article 31 of TRIPS, which permits such licenses under specific safeguards. Famous Case in India Natco Pharma vs. Bayer (2012): Bayer had a patent on a cancer drug Nexavar, priced at ₹2.8 lakh/month. Natco applied for compulsory license, promising to sell it at ₹8,800/month. The Controller of Patents granted the license. It was the first compulsory license issued in India, under Section 84. Key Points to Remember Patent holder still retains the patent; only the use is licensed. The licensee must pay royalty to the patent holder (reasonable amount decided by the authority). The objective is to balance innovation rights and public interest. It cannot be used arbitrarily—proper procedure and evidence are required. Summary Compulsory licensing is a legal tool that allows the use of patented inventions without the patent holder’s consent, but only: When public interest is at stake If the patented product is not reasonably accessible With government or patent office approval Subject to payment of royalties It ensures that intellectual property rights do not override the rights of the public, especially in critical areas like healthcare, food, and national emergencies.

Answer By Ayantika Mondal

Dear Client, Compulsory license in patent law is a license of permission that enables an individual or a business to use an invention that is patented without seeking the permission of the patent holder usually at a cost. It can be characterized as an exception to the overall principle of the intellectual property (IP) laws that gives the owner of the patent the right to keep away or to decide whether to license their proprietary technology or not. The mandatory granting of a patent license is typically accompanied by the decision of a government organ and entails payment to the author of the patent. Although compulsory licenses may be declared on any patented invention, they are most often applicable to the pharmaceuticals and other inventions that concern the health of the people. Laws and International Treaties International major agreements deal with the authority of compulsory licensing: TRIPS Agreement: TRIPS gives the major international framework, which is the Agreement on Trade-Related Aspects of Intellectual Property Rights. TRIPS Articles 30 and 31 are some of the most important provisions, which enable nations to allow compulsory licensing, to meet urgent demands. The exceptions can often be called by the name of TRIPS flexibilities. Doha Declaration: This 2001 Declaration on the TRIPS Agreement and Public Health restated that TRIPS could and would be understood and applied in connection with the right of WTO Members to protect and advance public health and the furtherance of access to medicines. The Declaration provided that every member was entitled to issue compulsory licenses and free will to choose the reasons of their issue. A national emergency or an extreme urgency can be in the form of public health crises (such as the ones with HIV/AIDS, tuberculosis, and malaria). Paris Convention: the Convention on Paris on the protection of industrial property gives states the right to enact legislative measures giving rights to compulsory licensing to prevent abuses caused by the exercise of exclusive rights over patent, e.g. failure to work. Reasons to Be Supported by Compulsory Licenses The award of compulsory licenses can be based on certain prerequisites, which are usually based on the trade-off between exclusive rights to IP and the general interest. Reasons why a compulsory license should be granted usually encompass: National emergency or health needs in the population: Emergency situation, overwhelming need, or provision of essential public health. Affordability: In cases where the patented invention is not offered to the population at a fairly affordable rate. The issues of affordability have encouraged the developing world to take advantage of such provisions to produce vital pharmaceutical drugs to their population. Non-working or inadequate supply: In case the owner of the patent has not been practicing the invention he has patented in the jurisdiction where the patent was registered within a reasonable time. Incompetence of supply may also be a foundation. Anti-competitive behaviour: To reduce a practice that has been held after judicial or administrative process to be anti-competitive. Blocking Patents: When there are various patents by diverse owners of a specific technology (e.g., combination therapies), and one of the patentees will not grant a license, there may be the need to grant a compulsory license so that the technology can be marketed. I hope this answer helps; if you have any further questions please don't hesitate to contact us. Thank you

Answer By Anik

Dear client, Compulsory licensing is a concept that enables a third party to manufacture a patented product in certain exceptional circumstances. A compulsory License authorised by the government allows the company or an individual seeking other’s intellectual property to use it without having to seek the consent of the owner by paying a predetermined fee for the license. The compulsory license is regulated by the Indian Patents Act 1970. It is provided in the TRIPS (Trade-Related Aspects of Intellectual Property Rights) Agreement and took effect in India in January 1995. Indian Patent Act,1970 provides that after three years from the date of the grant of a patent, any person can apply for the compulsory license, on certain grounds which includes the following: 1. The reasonable requirements of the public with respect to the patented invention have not been satisfied 2. The patented invention is not available to the public at a reasonably affordable price 3. The patented invention is not used in the territory of India. As per Indian Patent Act,1970 the central government is authorized to issue a compulsory license at any time after the grant of the patent, in the case of national emergency or in the case of public non-commercial use. Conditions for Issuing Compulsory License 1. The person or company applying for a licence has to have tried, within a reasonable period of time, to negotiate a voluntary licence with the patent holder on reasonable commercial terms. Only if that fails can a compulsory licence be issued. 2.When a compulsory license has been issued, the patent owner has to receive payment that is adequate and reasonable. 3. The scope and duration of the licence must be limited to the purpose for which it was granted, it cannot be given exclusively to licensees and it should be subject to legal review. It could be concluded that compulsory licensing was introduced with the primary aim of providing certain benefits to the public at large and is an attempt of controlling the monopolistic rights of the patentees. I hope this answer was helpful. For any further queries please do not hesitate to contact us.