What is a compulsory license?
In 2001, South Africa faced difficulty accessing essential HIV/AIDS medications due to high patent prices. The government issued compulsory licenses to allow generic production of these drugs, improving access for patients.
The case, in 2012, between Natco Pharma and Bayer Corporation involved a life-saving cancer medication called Nexavar (Sorafenib Tosylate), patented by Bayer Corporation. In India, Natco Pharma, a generic drug manufacturer, applied for and was granted the first-ever compulsory license in the country's history. The basis for granting the license was that Bayer's drug was not manufactured in India, making it inaccessible for many patients due to the high cost. Natco offered a significantly cheaper generic version, increasing affordability and patient access.
Several countries have used compulsory licenses to ensure access to affordable generic medicines during public health emergencies.
While patents grant inventors exclusive rights for a specific period, compulsory licenses allow governments to authorize others to use the invention without permission under specific conditions. This balances the rights of inventors with broader public interests.
However, obtaining the compulsory license comes with specific conditions:
- Failed Negotiations: The applicant must attempt to obtain a voluntary license on reasonable terms
before seeking a compulsory license.
- Fair Compensation: The patent holder receives "adequate remuneration" for the use of their
invention.
- Limited Scope and Duration: The license is restricted to address specific concerns (e.g., public
health) and has a limited duration.
- Non-Exclusive and Subject to Review: The license is non-exclusive, allowing the inventor to use or
license the invention themselves, and subject to legal review.
Several scenarios can trigger the issuance of a compulsory license. For example, in India, The Indian Patent Act, 1970, outlines the provisions for compulsory licenses under Chapter XVI (Sections 84-92).
A compulsory license in India can be granted after three years from the date the patent is granted if (a) the reasonable requirements of the public with respect to the invention are not satisfied (b) the patented invention is not available to the public at a reasonably affordable price (c) the patented invention is not worked in the territory of India (not being actively used).
There are additional provisions for compulsory licenses in specific cases like national emergencies, public non-commercial use, and export of patented pharmaceutical products.
The TRIPS Agreement establishes a framework for compulsory licensing across WTO member countries the grounds for which include public health needs, promoting competition, and non-working of the invention.
Specific requirements and procedures for issuing compulsory licenses may vary slightly between countries, but the core principles remain consistent with the TRIPS Agreement.
In essence, compulsory licenses are a safety valve, allowing the government to intervene in specific situations where public interest outweighs the exclusive rights granted by a patent.
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