Chapter 16 : The Patent Act,1970

Chapter XVI: Working of Patents, Compulsory Licences and Revocation

Section 82: Definition of “patented articles” and “patentee”.

This section provides special definitions that apply only to this chapter (Chapter XVI).

• (a) “patented article” includes any article made by a patented process; and
  • Plain English: For this chapter, a “patented article” means two things:
    1. A product that is itself patented (e.g., a new type of drug).
    2. A product that is not patented, but was made using a patented process (e.g., a generic drug made using a new, patented manufacturing method).
  • Real-world Example: A company patents a new, cost-effective process for making steel. The steel itself is a standard, well-known material. However, when discussing the “working” of this patent, the steel produced by this new method is considered a “patented article.”
• (b) “patentee” includes an exclusive licensee.
  • Plain English: For this chapter, when the law says “patentee” (the patent owner), it also refers to an “exclusive licensee.” An exclusive licensee is a person or company that the patent owner has given the sole and exclusive right to make, use, and sell the invention in India.
  • Real-world Example: A US university (the patentee) invents a new medical scanner and gives an “exclusive licence” to an Indian company, “IndiaMed,” to be the only company that can make and sell it in India. For the purposes of this chapter, IndiaMed has the same rights and responsibilities as the university.

Section 83: General principles applicable to working of patented inventions.

This is a crucial section. It doesn’t set hard rules, but explains the philosophy and intent of Indian patent law. The Controller must keep these principles in mind when making decisions, especially regarding compulsory licences.

• (a) that patents are granted to encourage inventions and to secure that the inventions are worked in India on a commercial scale and to the fullest extent that is reasonably practicable without undue delay;
  • Plain English: Patents have two goals: to encourage people to invent, and to ensure those inventions are actually manufactured and used in India on a large scale, not just sitting on a shelf.
  • Real-world Example: An inventor patents a new water filter. This principle means the intent of the law is for that inventor (or someone they license) to start manufacturing and selling those filters in India, so the public can benefit.
• (b) that they are not granted merely to enable patentees to enjoy a monopoly for the importation of the patented article;
  • Plain English: A patent should not be just a tool to get a monopoly on importing a product. The law wants to see the product made in India, which creates jobs and transfers technology.
  • Real-world Example: A foreign company gets a patent for a new solar panel in India. It then only imports the panels from its factory in China and sells them at a high price, refusing to build a factory in India. This clause states that this is not the purpose of an Indian patent and can be used as a strong argument for granting a compulsory licence to an Indian manufacturer.
• (c) that the protection and enforcement of patent rights contribute to the promotion of technological innovation… to the mutual advantage of producers and users… and to a balance of rights and obligations;
  • Plain English: The patent system is a “social contract.” The patent owner gets a “right” (a 20-year monopoly), but they have an “obligation” (to benefit the public and share technology). The system should help spread new knowledge for everyone’s mutual benefit.
  • Real-world Example: A company patents a new software algorithm. The “balance” means the company gets to license it for a profit, but the “obligation” means that after 20 years (or through licensing), others can learn from and build upon that algorithm, pushing technology forward.
• (d) that patents granted do not impede protection of public health and nutrition and should act as instrument to promote public interest specially in sectors of vital importance…
  • Plain English: Patents must never stand in the way of public health or food security. In critical areas like medicine and agriculture, patents should be used to help the public, not just to profit.
  • Real-world Example: A company patents a new life-saving cancer drug and prices it so high that 99% of the population cannot afford it. This “impedes the protection of public health.” This principle strongly supports granting a compulsory licence to a generic manufacturer to produce a low-cost version.
• (e) that patents granted do not in any way prohibit Central Government in taking measures to protect public health;
  • Plain English: This is even more direct. A patent cannot be used as a weapon to stop the Government from taking any action it needs to protect its citizens’ health.
  • Real-world Example: During a pandemic, the government needs a patented ventilator component. This clause confirms the government has the power to use that invention to save lives, even if the patent owner objects.
• (f) that the patent right is not abused by the patentee… and the patentee… does not resort to practices which unreasonably restrain trade or adversely affect the international transfer of technology;
  • Plain English: A patent owner cannot use their patent in an abusive or anti-competitive way, such as blocking trade or preventing technology from being shared or developed.
  • Real-world Example: A company owns a patent for a critical component in all electric vehicle batteries. It refuses to license the patent to any car manufacturer, not because it’s making the component itself, but just to stifle the entire EV industry. This could be seen as an abuse of the patent right that “unreasonably restrains trade.”
• (g) that patents are granted to make the benefit of the patented invention available at reasonably affordable prices to the public.
  • Plain English: This is the “reasonable price” principle. The ultimate goal of a patent is to get the invention to the public at a price they can actually afford.
  • Real-world Example: A patent is granted for a new, cheaper-to-produce malaria test kit. The patentee, however, sells it at the same high price as the old, more expensive kits, just to maximize profit. This goes against the principle that the benefit (the lower cost) should be passed on to the public at a “reasonably affordable price.”

Section 84: Compulsory licences.

This is the main section that allows a third party to get a “compulsory licence”—a forced permission from the government to use a patent, even if the patent owner says no.

• (1) At any time after the expiration of three years from the date of the grant of a patent, any person interested may make an application to the Controller for grant of compulsory licence… on any of the following grounds…
  • Plain English: Any person with a legitimate interest (e.g., a rival company, an NGO) can ask the Controller for a compulsory licence. But they must wait three years from the date the patent was officially granted. They must prove one of these three things:
• (1)(a) that the reasonable requirements of the public with respect to the patented invention have not been satisfied, or
  • Plain English: The public needs the invention, but they aren’t getting enough of it, or it’s not available in the quality or form they need.
  • Real-world Example: A patent is for a high-efficiency water filter. The patent owner is only manufacturing 1,000 units a month, but the demand in drought-stricken areas is for 100,000 units a month. An Indian company can argue that the “reasonable requirements of the public are not satisfied” and apply for a compulsory licence to manufacture the filters and meet the demand.
• (1)(b) that the patented invention is not available to the public at a reasonably affordable price, or
  • Plain English: The invention is available, but the price is so high that ordinary people cannot afford it.
  • Real-world Example: This was the basis of India’s first compulsory licence (the Natco v. Bayer case). Bayer’s patented cancer drug, Nexavar, was sold for ₹2,80,000 for a month’s supply. Natco applied for a compulsory licence, arguing this was not “reasonably affordable.” The Controller agreed and granted Natco a licence to sell a generic version for around ₹8,800.
• (1)(c) that the patented invention is not worked in the territory of India.
  • Plain English: The patent owner is not “working” the invention in India (as per Section 83’s principles). They are not manufacturing it here or using the process here. In many cases, they are only importing the final product.
  • Real-world Example: A foreign company gets a patent for a new type of biodegradable plastic. Three years later, it has not set up a factory in India and has not licensed any Indian company to make it. An Indian manufacturer can apply for a compulsory licence on the grounds that the invention is “not worked in the territory of India,” arguing that they are ready to build a plant and produce it locally.
• (2) An application… may be made by any person notwithstanding that he is already the holder of a licence under the patent and no person shall be estopped from… [making the application]… by reason of any admission made by him…
  • Plain English: This protects the person applying for the compulsory licence.
    • Even if you already have a voluntary licence from the patent owner, you can still apply for a compulsory one (e.g., if the voluntary licence has unfair terms).
    • You are not blocked (“estopped”) from applying just because you previously signed an agreement that said, “I agree the patent is valid” or “I agree the price is reasonable.” The Controller will ignore that agreement and look at the facts.
  • Real-world Example: A small company takes a voluntary licence from a big one. The licence has a clause saying, “Licensee agrees that the royalty rate is fair.” Two years later, the big company is still not meeting public demand. The small company can apply for a compulsory licence (which might have better terms), and the big company cannot say, “But you already agreed our terms were fair!”
• (3) Every application… shall contain a statement setting out the nature of the applicant’s interest together with such particulars as may be prescribed and the facts upon which the application is based.
  • Plain English: You can’t just ask for a licence. Your application must state who you are and why you have a legitimate interest (e.t., “we are a pharmaceutical company with the capacity to produce this drug”). You must also provide all the facts and evidence to support your claim (e.g., “here are the current market prices,” “here is the data on public demand vs. supply”).
  • Real-world Example: In its application, Natco had to prove it was a “person interested” by showing it was a capable and established pharmaceutical company. It then had to provide detailed “facts,” including Bayer’s price for Nexavar and its own proposed, much lower price.
• (4) The Controller, if satisfied that [the grounds are met]… may grant a licence upon such terms as he may deem fit.
  • Plain English: After reviewing all the evidence, if the Controller agrees that one of the three grounds (not enough supply, too expensive, or not made in India) is true, they can grant the compulsory licence. The Controller also decides the terms of the licence, such as the royalty percentage the new licensee must pay to the original patent owner.
  • Real-world Example: The Controller granted the compulsory licence to Natco. As part of the “terms,” the Controller ordered Natco to pay a 6% royalty to Bayer on all sales of its generic version.
• (5) Where the Controller directs the patentee to grant a licence he may, as incidental thereto, exercise the powers set out in section 88.
  • Plain English: This is a cross-reference. It just means that when granting a licence, the Controller can also use their additional powers from Section 88 (which we will get to later), such as ordering the licence to cover related patents or amending existing licences.
• (6) In considering the application filed under this section, the Controller shall take into account, –
  • Plain English: When making the decision, the Controller must consider all sides of the story, including:
  • (i) the nature of the invention, the time which has elapsed… and the measures already taken by the patentee… to make full use of the invention;
    • Plain English: What is the invention (a toy or a life-saving drug)? How long has the patent owner had to get their act together? What effort has the patent owner actually made to use the invention?
    • Real-world Example: The patent owner argues, “It’s a complex biotech product; it takes 5 years just to build a factory!” The Controller will “take this into account” to see if this is a valid excuse or just stalling.
  • (ii) the ability of the applicant to work the invention to the public advantage;
    • Plain English: Does the person applying for the licence (the applicant) actually have the skill, factory, and money to produce the invention properly and benefit the public?
    • Real-world Example: A shell company with no factory applies for a compulsory licence to make a car engine. The Controller will likely refuse, as the applicant clearly doesn’t have the “ability… to work the invention.” But if a major auto-parts company applies, the Controller will be satisfied.
  • (iii) the capacity of the applicant to undertake the risk in providing capital and working the invention…
    • Plain English: This is similar to (ii). Does the applicant have the financial and technical ability to take on this big project, including all the risks?
    • Real-world Example: An applicant wants a licence for a new semiconductor chip. The Controller will check if the applicant has the massive investment needed for a chip factory (“fab”) and can handle the “risk” of such a large undertaking.
  • (iv) as to whether the applicant has made efforts to obtain a licence from the patentee on reasonable terms and conditions and such efforts have not been successful within a reasonable period…
    • Plain English: This is a critical first step. The Controller will ask, “Did you (the applicant) first try to get a normal, voluntary licence from the patent owner? Did you make them a fair offer? And did they refuse or ignore you for a reasonable time (see Explanation below)?”
    • Real-world Example: Natco had to prove to the Controller that it first approached Bayer with an offer to get a voluntary licence. Bayer refused. Only after this refusal could Natco’s application for a compulsory licence be considered. You can’t just go straight to a compulsory licence without trying to negotiate first.
  • Proviso to (6)(iv):
    • Plain English: You don’t have to try to negotiate first (i.e., step (iv) is skipped) in four special cases:
      1. A national emergency (e.g., a war).
      2. Extreme urgency (e.g., a pandemic).
      3. Public non-commercial use (e.g., the government wants to make the drug only for its free public hospitals, not for profit).
      4. Anti-competitive practices (e.g., a court has already ruled that the patentee is abusing its patent).
    • Real-world Example: During a severe COVID-19-like crisis, the government can grant a compulsory licence for a needed drug immediately without forcing the applicant to waste 6 months trying to negotiate with the patent owner.
  • Explanation to (6):
    • Plain English: This defines the “reasonable period” for negotiation. It means you should try to negotiate with the patent owner for up to six months. If you haven’t gotten a “yes” after six months of good-faith effort, you can then file your compulsory licence application.
• (7) For the purposes of this Chapter, the reasonable requirements of the public shall be deemed not to have been satisfied-
  • Plain English: This section provides a detailed checklist for proving ground (1)(a) (“reasonable requirements not satisfied”). You meet this ground if:
  • (a) by reason of the refusal of the patentee to grant a licence… on reasonable terms…
    • (i) an existing trade or industry… is prejudiced; or
      1. Plain English: An existing Indian business is being harmed because the patentee won’t license to them.
      2. Example: An Indian company makes laptops. A new patent for a “must-have” processor comes out. The patentee refuses to license the chip to the Indian company, which means its laptops are now obsolete. That Indian company’s business is “prejudiced.”
    • (ii) the demand for the patented article has not been met…; or
      1. Plain English: There isn’t enough of the product to go around (the simple supply/demand test).
      2. Example: 10,000 patients need a patented heart valve, but the patentee is only supplying 1,000.
    • (iii) a market for export… is not being supplied or developed; or
      1. Plain English: An Indian company could be exporting the product (creating jobs and revenue for India), but the patentee is blocking them.
      2. Example: An Indian drug maker has a contract to supply a patented AIDS drug to several African nations. The Indian patent owner refuses to grant an export licence.
    • (iv) the establishment or development of commercial activities in India is prejudiced;
      1. Plain English: The patentee’s refusal is stopping new businesses from even starting.
      2. Example: A group wants to start a new business based on using a patented recycling technology. The patentee’s refusal to license stops this new “commercial activity” before it can even begin.
  • (b) if, by reason of conditions imposed by the patentee… the manufacture, use or sale of materials not protected by the patent… is prejudiced; or
    • Plain English: The patentee sets unfair “tying” conditions. This means they say, “Sure, you can license my patented printer, but you must also agree to buy all your paper and ink (which are not patented) from me.” This is anti-competitive.
    • Example: A company patents a new coffee machine. It licenses it to cafes, but the licence contract requires all cafes to buy their coffee beans (which are not patented) exclusively from the patent owner. This prejudices the business of other coffee bean suppliers.
  • (c) if the patentee imposes a condition… to provide exclusive grant back, prevention to challenges to the validity of patent or coercive package licensing; or
    • Plain English: The patentee forces other abusive, anti-competitive conditions:
      1. “Exclusive grant-back”: “If you (the licensee) make any improvements to my invention, you must give them exclusively back to me.”
      2. “Prevention to challenges”: “You (the licensee) must agree to never challenge my patent’s validity in court.”
      3. “Coercive package licensing”: “You want to license my one useful patent? Well, you have to pay for a ‘package’ of my 10 other useless patents, too.”
    • Example: A small company licenses a patent. The contract says, “By signing this, you agree you will never sue to invalidate this patent.” This clause is illegal, and its presence can be used as a reason to apply for a compulsory licence.
  • (d) if the patented invention is not being worked in the territory of India on a commercial scale…; or
    • Plain English: This is the “not worked in India” point again (from 84(1)(c)), restated as part of the “reasonable requirements” definition. It means the invention isn’t being made or used in India at a commercial level.
  • (e) if the working… is being prevented or hindered by the importation from abroad…
    • Plain English: This is the “local manufacturing vs. import” point again (from 83(b)). It says the “working in India” is being hindered because the market is just being flooded with imported versions of the product. This applies if the importer is:
      1. The patent owner themselves.
      2. Their official distributors.
      3. “Grey market” importers (unauthorized importers) whom the patentee knows about but deliberately ignores.
    • Example: A patentee has a patent for a new TV. An Indian company wants to manufacture it, but can’t compete because the patentee is flooding the Indian market with cheap TVs imported from its own factory in Vietnam. The patentee is using the patent only as an import monopoly. This is a strong ground for the Indian company to get a compulsory licence.

Section 85: Revocation of patents by the Controller for non-working.

This is the “nuclear option.” It’s an even stronger step than a compulsory licence. This is about revoking (cancelling) the patent entirely.

• (1) Where… a compulsory licence has been granted, the Central Government or any person interested may, after the expiration of two years from the date of the order granting the first compulsory licence, apply to the Controller for an order revoking the patent on the ground that [the same grounds as section 84]…
  • Plain English: This is a “two-strike” rule.
    • Strike 1: A compulsory licence was already granted (under s. 84).
    • Waiting Period: Two years have passed after that licence was granted.
    • Strike 2: Even with the compulsory licence in place, the problem still hasn’t been fixed. The invention still isn’t worked in India, the price is still not affordable, or the public’s needs are still not met.
    • If all this is true, any interested person (or the Government) can apply to the Controller to have the patent cancelled completely.
  • Real-world Example:
    • In 2015, Natco gets a compulsory licence for Bayer’s drug.
    • In 2017 (two years later), an investigation shows that even with Natco’s help, the reasonable requirements of the public are still not being met.
    • At this point, another company (or the government) could apply to the Controller to revoke Bayer’s patent entirely, which would open the market for all generic manufacturers to produce the drug.
• (2) Every application… shall contain such particulars… the facts… and… set out the nature of the applicant’s interest.
  • Plain English: Just like in 84(3), the application to revoke must be extremely detailed. It must provide all the facts and evidence and state who the applicant is and why they have an interest.
  • Real-world Example: An application to revoke would need to show: (1) “A compulsory licence was granted on [Date].” (2) “Two years have passed.” (3) “Here is the new evidence that the public’s needs are still not met as of today.”
• (3) The Controller, if satisfied… may make an order revoking the patent.
  • Plain English: If the Controller reviews the application and agrees that the patentee (and the compulsory licensee) have failed to fix the problem, they can issue an order permanently revoking the patent.
  • Real-world Example: The Controller agrees that even after 5+ years, the invention is not being properly worked in India. The Controller issues an order, and the patent is now void and unenforceable.
• (4) Every application… shall ordinarily be decided within one year of its being presented to the Controller.
  • Plain English: The Controller must try to make a final decision on an application for revocation within one year. This is to ensure the process doesn’t drag on indefinitely.
  • Real-world Example: A company applies to revoke a patent on March 1, 2025. The Controller is expected by law to hold all hearings, review all evidence, and issue a final “yes” or “no” decision by March 1, 2026.

Section 86: Power of Controller to adjourn applications for compulsory licences, etc., in certain cases.

This section gives the Controller the power to “pause” a proceeding for a compulsory licence (CL) or revocation, to give the patent owner a chance to start manufacturing, provided they have a good reason for the delay.

• (1) Where an application under section 84 or section 85… is made on the grounds that the patented invention has not been worked in the territory of India… and the Controller is satisfied that the time which has elapsed since the sealing of the patent has… been insufficient to enable the invention to be worked… he may, by order, adjourn the further hearing… for such period not exceeding twelve months…
  • Plain English: If a patent owner is sued for a compulsory licence (or revocation) because they aren’t manufacturing in India, they can make a defense. They can argue, “I am trying to manufacture, but it’s a highly complex invention and I just haven’t had enough time since the patent was granted.”
  • If the Controller agrees that the delay is for a legitimate reason (e.g., it takes 4 years to build a safe, specialized chemical plant), they can “adjourn” (pause) the case for up to 12 months to give the patent owner a final chance to start production.
  • Real-world Example: A company gets a patent for a new, complex semiconductor chip in 2022. Building a chip factory (“fab”) is a massive, multi-year undertaking. In 2025 (3 years later), a rival applies for a CL, arguing “it’s not worked in India.” The patent owner shows the Controller their factory blueprints, the ₹5,000 crore in loans, and the construction site that is 70% complete. The Controller, seeing this, adjourns the CL case until 2026, giving the patent owner time to finish the factory.
• Proviso to (1): Provided that in any case where the patentee establishes that the reason why a patented invention could not be worked… was due to any State or Central Act or any rule… or any order of the Government… then, the period of adjournment… shall be reckoned from the date on which the period during which the working of the invention was prevented… expires.
  • Plain English: This is a special rule for delays caused by the government. If the patent owner couldn’t start manufacturing because they were stuck waiting for a different government department (e.g., getting environmental clearance, or drug pricing approval), the 12-month “pause” clock doesn’t even start until that other government delay is resolved.
  • Real-world Example: A company patents a new life-saving drug. It cannot legally sell it until the Drug Controller General of India (DCGI) completes its own multi-year safety and pricing approvals. A rival applies for a CL. The patent owner proves they are stuck waiting for the DCGI. The DCGI approval finally comes on June 1, 2025. The Controller’s 12-month “adjournment” starts from June 1, 2025, giving the patent owner until June 1, 2026, to launch the drug.
• (2) No adjournment… shall be ordered unless the Controller is satisfied that the patentee has taken with promptitude adequate or reasonable steps to start the working of the invention…
  • Plain English: This “pause” is not an automatic right. The patent owner can’t just say, “I need more time.” They must provide proof that they have been actively and diligently trying to start manufacturing (e.g., by showing factory contracts, investment receipts, employee hire documents). If they have done nothing for 3 years, the Controller will refuse to pause the case.
  • Real-world Example: Using the same semiconductor case, if the patent owner had asked for an adjournment but had no factory plans, no loans, and no proof of any effort, the Controller would deny the request and proceed with the compulsory licence case.

Section 87: Procedure for dealing with applications under sections 84 and 85.

This section lays out the step-by-step legal procedure for how the Controller must handle a compulsory licence or revocation case.

• (1) Where the Controller is satisfied… that a prima facie case has been made out… he shall direct the applicant to serve copies of the application upon the patentee… and shall publish the application in the official journal.
  • Plain English: When an application for a CL lands on the Controller’s desk, the first step is a quick review. If the application looks legitimate and has basic facts to support it (a prima facie case), the Controller “activates” the case. They tell the applicant, “You must now officially send a copy of this application to the patent owner,” and they also publish a notice in the patent office journal for the public to see.
  • Real-world Example: The Controller receives Natco’s application against Bayer, which clearly states Bayer’s high price and Natco’s low price. This is a clear prima facie case under 84(1)(b). The Controller directs Natco to formally serve the legal papers to Bayer and publishes a notice: “An application for a compulsory licence has been filed by Natco against Patent No. 12345.”
• (2) The patentee or any other person desiring to oppose the application may… give to the Controller notice of opposition.
  • Plain English: The patent owner (or their exclusive licensee) who receives the application has a specific amount of time to file their formal “Notice of Opposition.” This is the document that officially says, “We are going to fight this.”
  • Real-world Example: Bayer’s legal team, upon receiving the application from Natco, prepares and files a “Notice of Opposition” with the Controller, officially starting the legal battle.
• (3) Any such notice of opposition shall contain a statement setting out the grounds on which the application is opposed.
  • Plain English: The patent owner can’t just say, “We object.” They must state their specific legal and factual reasons for objecting.
  • Real-world Example: Bayer’s opposition notice states its “grounds,” such as: “Our price is reasonable given our R&D costs,” “We are meeting the reasonable requirements of the public,” and “Natco does not have the capability to produce this complex drug safely.”
• (4) Where any such notice of opposition is duly given, the Controller shall notify the applicant, and shall give to the applicant and the opponent an opportunity to be heard before deciding the case.
  • Plain English: This ensures a fair trial. The Controller sends the patent owner’s opposition grounds to the applicant (who then usually files a reply). After all the written evidence is submitted, the Controller must give both sides a chance to argue their case in person at a formal hearing before making a final decision.
  • Real-world Example: The Controller schedules a hearing. Lawyers for Natco and Bayer appear and make oral arguments, present their evidence, and answer the Controller’s questions. Only after this hearing does the Controller issue the final order granting or refusing the licence.

Section 88: Powers of Controller in granting compulsory licences.

This section gives the Controller extra powers to fix complex situations when granting a CL.

• (1) Where the Controller is satisfied… that the manufacture, use or sale of materials not protected by the patent is prejudiced by reason of conditions imposed by the patentee… he may… order the grant of licences under the patent to such customers of the applicant as he thinks fit as well as to the applicant.
  • Plain English: This targets unfair “tying” (bundling) arrangements (from S.84(7)(b)). If a patentee forces customers to buy their unpatented products (e.g., “You can only use my patented printer if you buy my unpatented ink”), an ink supplier can apply for a CL. The Controller can then grant a licence not only to the ink supplier but also directly to the customers (the offices), allowing them to use the printer with the applicant’s ink, effectively breaking the unfair bundle.
  • Real-world Example: A company patents a new coffee machine (Patent A) and forces all cafes to also buy their (unpatented) coffee beans. A rival bean supplier, “BeanCo,” applies for a CL. The Controller grants a licence to “BeanCo” and also issues an order stating that any cafe (the customers) that buys beans from BeanCo is also automatically licensed to use Patent A, the coffee machine.
• (2) Where an application… is made by a person being the holder of a licence under the patent, the Controller may… order the existing licence to be cancelled, or may… instead… order the existing licence to be amended.
  • Plain English: This deals with an applicant who already has a voluntary licence but finds it unfair. The Controller has two choices:
    1. Cancel: Cancel the old, unfair voluntary licence and issue a brand new compulsory licence with fair terms.
    2. Amend: Simply “fix” the old licence by issuing an order that changes the unfair parts (e.g., “The royalty rate in clause 5 is hereby changed from 20% to 5%”).
  • Real-world Example: A small company has a voluntary licence to make a patented toy, but the royalty is an abusive 30%. They apply for a CL. The Controller, rather than writing a whole new licence, issues an order amending the existing one, stating, “The royalty in the 2021 licence agreement is amended to 4%.”
• (3) Where two or more patents are held by the same patentee… and… the Controller is satisfied that the applicant cannot efficiently… work the licence… without infringing the other patents… and if those patents involve important technical advancement… he may… direct the grant of a licence in respect of the other patents also…
  • Plain English: This is to prevent a patent owner from “trapping” a licensee. If an applicant gets a CL for Patent A, but they can’t possibly make it without also using the patent owner’s Patent B, the CL for Patent A is useless. If Patent B is a significant, important invention (not just a minor tweak), the Controller can force the patent owner to include Patent B in the licence as well.
  • Real-world Example: A company gets a CL for a new patented drug (Patent A). However, the patentee also holds a separate, groundbreaking patent on the only chemical process that can make that drug (Patent B). The CL for Patent A is useless without Patent B. The Controller, seeing this, grants a CL that covers both patents, allowing the licensee to actually manufacture the drug.
• (4) Where the terms… of a licence have been settled… the licensee may, at any time after he has worked the invention… for… not less than twelve months, make an application to the Controller for the revision of the terms… on the ground that the terms… have proved to be more onerous than originally expected and that… the licensee is unable to work the invention except at a loss…
  • Plain English: A licensee gets a CL, starts manufacturing for at least one year, and then realizes, “I’m losing money. The royalty rate we agreed on is too high, or the market conditions are tougher than anyone thought.” This sub-section allows them to go back to the Controller one time and ask to revise the terms (e.g., “Please lower the royalty from 6% to 3%”).
  • Proviso: This is a one-shot deal. The licensee “shall not be entertained a second time” for another revision.
  • Real-world Example: Natco gets its CL at a 6% royalty. Two years later, the price of the raw chemical needed for the drug unexpectedly triples, wiping out their profit. Natco can apply to the Controller once for a revision, showing its financial records and asking for the royalty to be lowered to 2% to remain viable.

Section 89: General purposes for granting compulsory licences.

This section is a set of “guiding principles” for the Controller, similar to Section 83. It explains the goals the Controller must try to achieve when granting a CL.

• …The powers… shall be exercised with a view to securing the following general purposes…
  • (a) that patented inventions are worked on a commercial scale in the territory of India without undue delay and to the fullest extent that is reasonably practicable;
    • Plain English: Goal #1: Get it made in India. The Controller’s main objective is to make sure the invention is being manufactured on a large scale, in India, as soon as possible.
  • (b) that the interests of any person for the time being working or developing an invention in the territory of India under the protection of a patent are not unfairly prejudiced.
    • Plain English: Goal #2: Be fair. While achieving Goal #1, the Controller must not be unfair to the original patent owner or any other licensees who are already making good-faith efforts to manufacture the invention.
  • Real-world Example (Balancing both goals): The Controller decides to grant a CL to an applicant. However, they also see that the original patent owner has just started building their own factory. To be fair (Goal #2), the Controller might grant the CL but set a lower production quota for the new licensee for the first two years, giving the patent owner a chance to compete fairly with their new factory, while still ensuring the product gets made (Goal #1).

Section 90: Terms and conditions of compulsory licences.

This is the “rulebook” for the Controller on what must (and must not) be included in the final compulsory licence agreement.

• (1) In settling the terms and conditions… the Controller shall endeavour to secure-
  • (i) that the royalty and other remuneration… is reasonable…
    • Plain English: The Controller must set a reasonable royalty rate that the new licensee pays to the patent owner, considering R&D costs, the nature of the invention, etc.
    • Real-world Example: In the Natco v. Bayer case, the Controller decided 6% of Natco’s net sales was a “reasonable” royalty for Bayer.
  • (ii) that the patented invention is worked to the fullest extent… and with reasonable profit to him;
    • Plain English: The terms must allow the new licensee to also make a reasonable profit. If the royalty is set too high, the licensee won’t have any incentive to make and sell the product, and the whole purpose of the CL fails.
    • Real-world Example: If a drug’s manufacturing cost is ₹80 and the affordable sale price is ₹100, the Controller will not set a royalty of ₹30 (which would cause a loss) but might set it at ₹5, allowing the licensee a ₹15 profit.
  • (iii) that the patented articles are made available to the public at reasonably affordable prices;
    • Plain English: This is the most important condition. The Controller must ensure the licence agreement results in a low price for the public.
    • Real-world Example: The Controller’s order to Natco was conditional on it selling the drug at or below the ₹8,800 price it had proposed.
  • (iv) that the licence granted is a non-exclusive licence;
    • Plain English: The CL is not a new monopoly. The original patent owner can still make, use, and sell their invention.
    • Real-world Example: After Natco’s CL was granted, Bayer was still free to sell its original Nexavar drug in India.
  • (v) that the right of the licensee is non-assignable;
    • Plain English: The company that gets the CL cannot sell or “assign” that licence to any other company.
    • Real-world Example: Natco gets a CL. It cannot then sell this licence to another company like Cipla. If Cipla wants a licence, it must file its own application.
  • (vi) that the licence is for the balance term of the patent unless a shorter term is consistent with public interest;
    • Plain English: The licence normally lasts for the remaining life of the patent.
    • Real-world Example: If a patent was granted in 2015 (and expires in 2035), a CL granted in 2025 will be valid until 2035.
  • (vii) that the licence is granted with a predominant purpose of supply in the Indian market…
    • Plain English: The licensee’s primary job is to serve the Indian public. They can export, but their main focus must be on meeting demand within India.
    • Real-world Example: The CL agreement might state that the licensee must “satisfy the demand in India first” before exporting any surplus production.
  • (viii) that in the case of semi-conductor technology, the licence granted is to work the invention for public non-commercial use;
    • Plain English: This is a very specific, high-tech restriction. For semiconductor chips, CLs are generally granted only for government or other non-profit uses (like national defense, public research), not for a rival company to sell in its own commercial products.
    • Real-world Example: The government’s defense research lab (DRDO) could get a CL for a patented chip to use in a new radar system (“public non-commercial use”). A private mobile phone company likely could not get a CL for that same chip to use in its new smartphone.
  • (ix) that in case the licence is granted to remedy a practice… [that is] anti-competitive, the licensee shall be permitted to export…
    • Plain English: This is an exception to rule (vii). If the reason for the CL was that a court found the patent owner to be “anti-competitive,” then the new licensee is allowed to export the product without restriction. This is to help break the patentee’s harmful global monopoly.
    • Real-world Example: A court rules that a company is using its patent to illegally control the entire global market. A CL is granted. The licensee can then sell the product in India and export it to any other country, helping to restore fair competition.
• (2) No licence granted by the Controller shall authorise the licensee to import the patented article or an article or substance made by a patented process from abroad…
  • Plain English: This is a critical rule. A compulsory licence is a licence to manufacture in India. It is NOT an import permit. The licensee cannot use the CL as a legal loophole to just import the product from a cheaper factory in China.
  • Real-world Example: Natco received its CL. This gave it the right to manufacture the drug in its own factories in India. It did not give Natco the right to import the generic drug from another country.
• (3) Notwithstanding anything contained in sub-section (2), the Central Government may, if in its opinion it is necessary so to do, in the public interest, direct the Controller at any time to authorise any licensee in respect of a patent to import…
  • Plain English: This is the only exception to the “no import” rule in (2). If there is an urgent public interest (like a pandemic or natural disaster), the Central Government itself (not the Controller) can issue a special direction. This direction orders the Controller to give a temporary import permit to the licensee to get the product to the public immediately while they are setting up their Indian factory.
  • Real-world Example: A national health crisis requires a patented vaccine immediately. An Indian company gets a CL, but it will take 6 months to set up the sterile manufacturing line. The Central Government, seeing the emergency, issues a direction to the Controller to also allow the company to import the vaccine from a pre-approved foreign plant for the first 6 months to save lives.

Section 91: Licensing of related patents.

This section deals with a complex situation known as “dependent patents.” This is when one invention (Invention B) is an improvement of another invention (Invention A) and cannot be made or used without also using Invention A.

• (1) …any person who has the right to work any other patented invention (Invention B)… may apply to the Controller for the grant of a licence of the first mentioned patent (Invention A) on the ground that he is prevented or hindered without such licence from working the other invention (Invention B) efficiently…
  • Plain English: Imagine an inventor (Applicant) gets a patent for a new invention, “Invention B.” But to make Invention B, they discover they must use a process or component that is already patented by someone else (“Invention A”). Their new patent is useless without a licence for the first patent. This section allows the owner of Invention B to apply for a compulsory licence for Invention A.
  • Real-world Example: Company X patents a specific diagnostic chemical (Invention A). Dr. Y then invents a groundbreaking medical testing machine (Invention B) that can only work by using Company X’s specific chemical. Dr. Y can’t sell her machine unless she can also supply the chemical. If Company X refuses to grant her a licence for Invention A, she can apply for a compulsory licence under this section.
• (2) No order under sub-section (1) shall be made unless the Controller is satisfied-
  • (i) that the applicant is able and willing to grant, or procure the grant to the patentee… of a licence in respect of the other invention on reasonable terms; and
    1. Plain English: This is the key: it must be a “two-way street.” The applicant (Dr. Y) can’t just take a licence from Company X. She must also be willing to give Company X a “cross-licence” to use her invention (Invention B) on reasonable terms.
  • (ii) that the other invention (Invention B) has made a substantial contribution to the establishment or development of commercial or industrial activities in the territory of India.
    1. Plain English: This is a high bar. The applicant’s new invention (Invention B) can’t just be a minor tweak. It must be a significant technological advancement or something that creates considerable economic value.
    2. Real-world Example (for both): The Controller asks Dr. Y (owner of the machine, Invention B) two questions. First, “Are you willing to license your machine patent back to Company X if they want it?” She must say yes. Second, “Is your machine just a minor improvement?” If she proves her machine is a major breakthrough that can save thousands of lives (a “substantial contribution”), the Controller will be satisfied. If it was just a new plastic casing for an old process, her application would be rejected.
• (3) When the Controller is satisfied that the conditions… have been established… he may make an order… granting a licence under the first mentioned patent (Invention A) and a similar order under the other patent (Invention B) if so requested…
  • Plain English: If the conditions in (2) are met, the Controller can grant the compulsory licence. This creates a “cross-licence”:
    1. Dr. Y (Applicant) gets a licence to use Company X’s chemical (Invention A).
    2. If Company X requests it, they get a licence to use Dr. Y’s new machine (Invention B).
  • Proviso: The licences are “non-assignable” except with the sale of the patent itself. (Dr. Y can’t sell her “licence for the chemical” to a third company).
• (4) The provisions of sections 87, 88, 89 and 90 shall apply…
  • Plain English: This just means the standard rules for CLs also apply here: the Controller must follow the proper legal procedure (S.87), can use extra powers (S.88), must follow the guiding principles (S.89), and must set reasonable terms like royalties (S.90).

Section 92: Special provision for compulsory licences on notifications by Central Government.

This is the “emergency” compulsory licence. It is faster, more powerful, and initiated by the Government itself for matters of extreme national importance.

• (1) If the Central Government is satisfied, in respect of any patent in force in circumstances of…
  • (i) national emergency; or
  • (ii) circumstances of extreme urgency; or
  • (iii) case of public non-commercial use,
• …that it is necessary that compulsory licenses should be granted… it may make a declaration to that effect, by notification in the Official Gazette…
  • Plain English: This is Step 1: The Central Government (not a private company) must first officially declare that a crisis exists. This could be a war (“national emergency”), a sudden pandemic or natural disaster (“extreme urgency”), or a need to supply government hospitals without any profit motive (“public non-commercial use”).
  • Real-world Example: A new, deadly virus appears. The Government publishes a “notification” in the Official Gazette declaring a “circumstance of extreme urgency” related to all patents for antiviral drugs and testing kits.
• …and thereupon the following provisions shall have effect, that is to say-
  • (i) the Controller shall on application made… by any person interested, grant to the applicant a licence under the patent on such terms and conditions as he thinks fit;
    • Plain English: This is Step 2: After the Government’s declaration, any capable company (e.g., a generic drug manufacturer) can apply to the Controller. The Controller doesn’t have to spend months deciding if a licence is needed (the government already did that). Their only job is to grant the licence and set the terms.
  • (ii) in settling the terms… the Controller shall endeavour to secure that the articles… shall be available to the public at the lowest prices consistent with the patentees deriving a reasonable advantage…
    • Plain English: The Controller’s main goal here is not to calculate a perfect royalty. It’s to ensure the lowest possible price for the public, while still giving the patent owner some (but not necessarily maximum) compensation.
• (2) The provisions of sections 83, 87, 88, 89 and 90 shall apply…
  • Plain English: The standard rules for CLs still apply (e.g., the licence will be non-exclusive, non-assignable, and the Controller sets the royalty).
• (3) Notwithstanding anything contained in sub-section (2), where the Controller is satisfied… that it is necessary in-
  • (i) a circumstance of national emergency; or
  • (ii) a circumstance of extreme urgency; or
  • (iii) a case of public non-commercial use,
• …he shall not apply any procedure specified in section 87 in relation to that application…
  • Plain English: This is the most important part of this section. In an emergency, all the normal, slow procedures are skipped.
  • Specifically, the applicant does not have to first try to negotiate with the patent owner for 6 months (as required by S.84(6)(iv)). The Controller also does not have to follow the long, multi-step opposition procedure (S.87). They can grant the licence almost immediately.
  • Real-world Example: A pandemic is declared. Cipla, an Indian drug maker, applies for a CL for a patented vaccine. The Controller can grant the licence the same day without forcing Cipla to first ask the patent owner for permission.
• Proviso to (3): Provided that the Controller shall, as soon as may be practicable, inform the patentee…
  • Plain English: Even though the licence is granted immediately, the Controller must still inform the patent owner about it as a matter of courtesy and public record.

Section 92A: Compulsory licence for export of patented pharmaceutical products in certain exceptional circumstances.

This section was added to comply with a World Trade Organization (WTO) agreement (the “TRIPS Agreement”). It allows India to manufacture and export patented drugs to countries that cannot make their own.

• (1) Compulsory licence shall be available for manufacture and export of patented pharmaceutical products to any country having insufficient or no manufacturing capacity… to address public health problems, provided compulsory licence has been granted by such country or such country has… allowed importation… from India.
  • Plain English: This allows an Indian company to get a CL only for exporting a patented drug. The conditions are:
    • The drug is a “pharmaceutical product.”
    • The importing country (e.g., a Least Developed Country in Africa) has a public health crisis (like AIDS, malaria, TB).
    • That country has “insufficient or no manufacturing capacity” (it can’t make the drug itself).
    • That country has either (a) already issued its own CL for this, or (b) officially notified the WTO that it intends to import the drug from India.
  • Real-world Example: Malawi is facing a severe HIV/AIDS crisis and needs a patented anti-retroviral drug. It has no drug factories. It notifies the WTO that it needs to import the drug. An Indian generic company can then apply to the Indian Controller for a CL under S.92A, allowing it to manufacture the drug only for export to Malawi.
• (2) The Controller shall… grant a compulsory licence solely for manufacture and export…
  • Plain English: The Controller grants the licence. It is strictly for export. The licensee is not allowed to sell the drug in India. This is the opposite of a standard CL.
• (3) The provisions of sub-sections (1) and (2) shall be without prejudice to the extent to which pharmaceutical products produced under a compulsory license can be exported under any other provision…
  • Plain English: This is a legal clarification. It just says that this specific export rule (S.92A) doesn’t interfere with any other export rights a licensee might have under a different section (like S.84(7)(a)(iii)).
• Explanation. …’pharmaceutical products’ means any patented product… of the pharmaceutical sector needed to address public health problems… inclusive of ingredients… and diagnostic kits…
  • Plain English: This defines what the section covers. It’s not just pills. It includes:
    • Patented drugs.
    • Drugs made by a patented process.
    • The active pharmaceutical ingredients (APIs) needed to make the drugs.
    • Patented diagnostic kits (e.g., a patented COVID-19 test).

Section 93: Order for licence to operate as a deed between parties concerned.

Legal Text: “Any order for the grant of a licence under this Chapter shall operate as if it were a deed granting a licence executed by the patentee and all other necessary parties embodying the terms and conditions, if any, settled bythe Controller.”

Plain English: The final, official order from the Controller granting a compulsory licence is as legally powerful and binding as a formal, signed contract (a “deed”) between the patent owner and the licensee.

Real-world Example: A company gets a CL. The patent owner tries to sue them, claiming, “We never signed a contract, so you have no right to our patent.” The licensee simply shows the court the Controller’s final order. The court will treat that order as if it were a signed contract, and the patent owner’s lawsuit will be dismissed.

Section 94: Termination of compulsory licence.

This section explains how a compulsory licence, once granted, can be cancelled if the situation changes.

• (1) On an application made by the patentee… a compulsory licence granted under section 84 may be terminated by the controller, if and when the circumstances that gave rise to the grant thereof no longer exist and such circumstances are unlikely to recur…
  • Plain English: The original patent owner can go back to the Controller and ask to cancel the CL. To be successful, they must prove two things:
    1. The problem that caused the CL is now solved (e.g., “Our drug price is now affordable,” or “We have built our own factory in India and are meeting 100% of the public’s demand”).
    2. The problem is “unlikely to recur” (e.g., “We promise not to raise the price again”).
  • Real-world Example: Bayer (the patent owner) builds a large factory in India and also drops the price of its drug to match Natco’s (the licensee). Bayer can then apply to the Controller to terminate Natco’s CL, arguing that the original grounds (unaffordable price, not worked in India) no longer exist.
• Proviso to (1): Provided that the holder of the compulsory licence shall have the right to object to such termination.
  • Plain English: The company that has the CL (the licensee) has the right to fight the termination.
  • Real-world Example: Natco would have the right to file an objection, arguing, “If our licence is terminated, Bayer will just wait one year and raise its prices again. The circumstances are likely to recur!”
• (2) While considering an application under sub-section (1), the Controller shall take into account that the interest of the person who had previously been granted the licence is not unduly prejudiced.
  • Plain English: The Controller must be fair to the licensee, who may have invested heavily based on the licence. The Controller can’t just cancel the licence overnight if it would be “unduly prejudicial” (massively unfair) to the licensee.
  • Real-world Example: The licensee (Natco) tells the Controller, “We just spent ₹200 crore building a new, specialized factory to produce this drug, all based on the CL you granted. You can’t just terminate our licence and leave us with a useless factory.” The Controller must “take this into account” and might refuse the termination, or might order a slow, phased-out termination to allow the licensee to recover their investment.