A patent confers exclusive rights on the patentee (S.48) but also imposes obligations (working requirement, disclosure, fee payment) and is subject to significant limitations (compulsory licensing, government acquisition, secrecy directions). The Indian system deliberately balances private monopoly with public interest.
Why: The patent is not an absolute right. S.83 declares the general principles: patents are granted to encourage inventions and ensure they are worked in India on a commercial scale, that they are available to the public at reasonably affordable prices, and that they do not impede protection of public health.
Legal Framework
| Category | Sections |
|---|---|
| Rights of patentee | S.48 |
| Term of patent | S.53 |
| General principles (policy) | S.83 |
| Compulsory licensing | S.84-92 |
| Government use | S.100-102 |
| Secrecy directions | S.35-42 |
| Working statement | S.146 |
| Surrender | S.63 |
| Revocation | S.64 |
Rights of Patentee (S.48)
Product patent (S.48(a))
Exclusive right to prevent third parties from making, using, offering for sale, selling, or importing the patented product in India.
Process patent (S.48(b))
Exclusive right to prevent third parties from using the patented process, and from using, offering for sale, selling, or importing the product directly obtained by that process in India.
| Right | Product patent | Process patent |
|---|---|---|
| Making | Yes | Using the process: Yes |
| Using | Yes | Product obtained by process: Yes |
| Selling | Yes | Product obtained by process: Yes |
| Importing | Yes | Product obtained by process: Yes |
| Independent creation | Can prevent (absolute) | Can prevent same process |
Other rights
| Right | Section | Detail |
|---|---|---|
| Assignment | S.68 | Can assign patent wholly or partially |
| Licensing | S.70 | Can grant exclusive/non-exclusive licences |
| Mortgage | S.68 | Can create security interest |
| Sue for infringement | S.104 | Only patentee/exclusive licensee can sue |
| Mark articles | S.111A | May mark "patented" with patent number |
Obligations of Patentee
| Obligation | Section | Requirement |
|---|---|---|
| Working the patent | S.83(b), S.146 | Patent must be worked in India to fullest extent reasonably practicable |
| Annual renewal fees | S.53(2), Rule 80 | Payment due before each anniversary; non-payment = lapse |
| Filing Form 27 (working statement) | S.146 | Annual statement to Controller declaring whether and how patent is worked in India |
| Disclosure of foreign filing info | S.8 | Must inform Controller of all corresponding applications filed abroad |
| Not anti-competitive | S.140 | Certain restrictive conditions in licence agreements are void |
Why: Working obligation ensures patents are not merely used as exclusionary tools to block Indian manufacture. If a patentee imports the product without manufacturing in India, it may trigger compulsory licensing under S.84(1)(c).
Limitations on Patent Rights
Compulsory Licensing (S.84-92)
S.84: Compulsory licence after 3 years
Any interested person may apply for compulsory licence if any of the following are established:
| Ground (S.84(1)) | Meaning |
|---|---|
| (a) Reasonable requirements of public not satisfied | Drug unavailable in sufficient quantity; demand unmet |
| (b) Not available at reasonably affordable price | Patented product priced beyond reach of ordinary consumers |
| (c) Not worked in territory of India | No manufacturing/adequate commercial exploitation in India |
Conditions for CL (S.90)
| Condition | Requirement |
|---|---|
| Reasonable royalty | Licensee must pay adequate royalty to patentee |
| Non-exclusive | CL is ordinarily non-exclusive |
| Predominantly for domestic market | CL granted primarily for supply of Indian market |
| Rights of patentee preserved | Patentee still receives remuneration |
| Review | CL may be terminated if circumstances change (S.94) |
S.92: CL for national emergency / extreme urgency / public non-commercial use
Controller may grant CL suo motu (without waiting 3 years) during:
- National emergency
- Circumstances of extreme urgency
- Public non-commercial use
S.92A: CL for export to countries with insufficient manufacturing capacity
Enables India to produce and export patented medicines to countries that lack manufacturing capacity (implements TRIPS Art. 31bis/Doha Para 6).
Government Use (S.100-102)
| Section | Power |
|---|---|
| S.100 | Government may use/authorise use of any patented invention for purposes of government |
| S.101 | Terms settled by agreement; if not, by High Court |
| S.102 | Acquisition of patent by government for public purpose (on payment of compensation) |
Why: Government use provisions ensure that critical needs (defence, public health, disaster response) cannot be held hostage by private patents. The government need not negotiate a licence before using; it can use first and settle terms later.
Secrecy Directions (S.35-42)
| Section | Rule |
|---|---|
| S.35 | Controller may direct secrecy for inventions relevant to defence |
| S.36 | Secrecy reviewed periodically; revoked if no longer relevant |
| S.39 | No filing abroad without prior written permission of Controller (for defence-relevant inventions) |
| S.42 | Compensation for non-grant due to secrecy |
Illustrations: What "Working" and "Affordable" Mean
"Worked in territory of India" — the Natco test:
| Scenario | Constitutes "working"? | Why |
|---|---|---|
| MNC manufactures drug in its Hyderabad plant and sells in India | Yes | Manufacturing on commercial scale within India |
| MNC imports finished drug from its US factory and sells in India | No (per Natco v. Bayer) | Import ≠ manufacturing in India; no industrial activity here |
| MNC licences an Indian company to manufacture on its behalf | Yes | Licensed manufacturing is working through another |
| MNC sets up a small pilot plant producing 100 units/year for a market needing 10,000 | Arguable | "To fullest extent reasonably practicable" — may trigger S.84(1)(a) |
"Reasonably affordable price" — context matters:
| Drug | Patentee price | Indian context | Affordable? |
|---|---|---|---|
| Cancer drug | Rs.2,80,000/month | Median Indian household income ~Rs.15,000/month | Not affordable (Natco v. Bayer) |
| Diabetes drug | Rs.500/month | Same household can allocate ~Rs.500 from income | Likely affordable |
| Rare disease drug | Rs.50,00,000/year | Only 200 patients in India need it; no generic exists | Complex; CL may still apply if insurance doesn't cover |
Compulsory licence ≠ free licence: Natco didn't get Bayer's drug for free. Natco must pay 6% royalty on net sales to Bayer. The CL forces a licence at government-determined terms — it's not expropriation. Bayer still earns revenue, just less than monopoly pricing would yield.
Recall Check
- What are the three grounds for compulsory licensing under S.84(1)?
- What is the working obligation under S.83 and how is compliance demonstrated?
- When can the government use a patented invention without the patentee's consent under S.100?
Key Cases
Natco Pharma v. Bayer (Controller of Patents, 2012) Natco-Pharma-v-Bayer-2012 Issue: Whether compulsory licence should be granted for Bayer's sorafenib tosylate (Nexavar, anti-cancer drug). Rule: S.84(1) requires satisfaction of any one ground: (a) public requirement not met, (b) not reasonably affordable, (c) not worked in India. All three were established. Held: India's first compulsory licence granted. Bayer's price Rs.2,80,000/month; Natco to sell at Rs.8,800/month. Bayer imported product from Germany (not worked in India). Royalty of 6% to Bayer. All three grounds under S.84(1) independently satisfied.
Bayer Corporation v. Union of India (2014) Bayer-Corporation-v-Union-of-India-2014 Issue: Challenge to compulsory licence granted to Natco; whether Bombay HC should interfere. Rule: Compulsory licensing is a policy tool; courts will not readily interfere with Controller's discretion on facts. Held: Writ petition dismissed. The CL order was upheld. Court confirmed that S.84 balances patent monopoly with public access. "Worked in territory of India" means actual manufacturing, not merely importing.
Distinctions
| Parameter | Compulsory Licence (S.84) | Government Use (S.100) |
|---|---|---|
| Who applies | Interested person (third party) | Government (Central/State) |
| Waiting period | 3 years from grant | No waiting period |
| Purpose | Commercial supply to Indian market | Government purposes (defence, health, etc.) |
| Remuneration | Royalty fixed by Controller | Terms settled by agreement/High Court |
| Non-exclusive | Yes (ordinarily) | Government can authorise any person |
| Grounds required | S.84(1)(a)-(c) | No grounds needed; just "purposes of government" |
| TRIPS basis | Art. 31 | Art. 31 (public non-commercial use) |
Flashcards
Q: What exclusive rights does a product patent confer under S.48(a)? A: Right to prevent third parties from making, using, offering for sale, selling, or importing the patented product in India.
Q: What are the three grounds for compulsory licensing under S.84(1)? A: (a) Reasonable requirements of public not satisfied, (b) not available at reasonably affordable price, (c) not worked in territory of India.
Q: What was the outcome of India's first compulsory licence (Natco v. Bayer)? A: CL granted; Nexavar price reduced from Rs.2,80,000 to Rs.8,800/month; 6% royalty to Bayer; all three S.84(1) grounds satisfied.
Q: What does "worked in territory of India" mean per Natco v. Bayer? A: Actual manufacturing in India on a commercial scale; merely importing the product does not constitute "working."
Q: What is the obligation under Form 27 (S.146)? A: Patentee must file annual statement declaring whether, how, and to what extent the patent is commercially worked in India.
Q: Can the government use a patented invention without consent? A: Yes. S.100 allows government use for "purposes of government" without prior consent; terms of remuneration are settled later.
Q: What is the term of a patent and what happens on non-payment of renewal fees? A: 20 years from filing. If renewal fees are not paid, patent lapses (ceases to have effect). Restoration possible within 18 months (S.60-61).
Q: What does S.92A enable? A: Export of patented medicines under compulsory licence to countries with insufficient manufacturing capacity (Doha Declaration/TRIPS Art. 31bis implementation).
Exam Scenario
DrugCo (USA) holds a patent for Drug Z in India (granted 2022). It imports the drug from its US facility and sells at Rs.1,50,000/month. No manufacturing facility exists in India. In 2026, GenPharma applies for compulsory licence under S.84.
Advise: (a) Whether the 3-year waiting period under S.84 is satisfied. (b) Whether importing from USA constitutes "working in the territory of India" (apply Natco v. Bayer). (c) What royalty rate GenPharma should offer and what conditions the Controller will impose under S.90. (d) Whether DrugCo can argue that small Indian market size justifies importation rather than local manufacturing. (e) If a pandemic makes Drug Z critical, whether the government can invoke S.92 without waiting 3 years.
See Also
- PIL-3.5 Treaties — TRIPS Art. 31 governs compulsory licensing conditions at international law; Indian S.84-92 must be read consistently with TRIPS Art. 31 obligations
- TRIPS Agreement 1994 and Its Impact — Doha Declaration para. 5 clarifies TRIPS flexibilities including compulsory licensing for public health; directly relevant to S.92 government use provisions
- IoS-3.3 Beneficial Construction — compulsory licensing provisions (S.84-92) interpreted beneficially in public interest; courts construe "reasonable requirements of the public" broadly