A compulsory licence lets someone make, use or sell a patented product without the patent owner’s consent. India has had the power since 1970 and has used it exactly once. The gap between the statute and the practice is the whole story.
What a compulsory licence is
Compulsory licences are, in essence, government authorisations allowing a third party to make, use or sell a patented product without the patent owner’s consent. They are provided for both under the Indian Patents Act, 1970 and, internationally, under the TRIPS Agreement.
They are granted for a range of reasons — preventing abuse of a patent to form a monopoly, addressing public health concerns, and similar. The subject has long been controversial, and despite the statutory provisions, compulsory licences have not been issued liberally.
The statutory provisions
Compulsory licences are dealt with under Chapter XVI of the Patents Act, with the conditions set out in Sections 84 and 92.
Section 84 — application by a person interested
Any person interested, or an existing licensee under the patent, may apply to the Controller after three years from the date of grant, on any of these grounds:
- the reasonable requirements of the public with respect to the patented invention have not been satisfied;
- the patented invention is not available to the public at a reasonably affordable price; or
- the patented invention is not worked in the territory of India.
In deciding, the Controller must weigh factors including the nature of the invention, the measures already taken by the patentee or licensee to make full use of it, the applicant’s ability to work the invention to public advantage, and the time elapsed since grant.
Section 92 — government-notified licences
Compulsory licences may also be issued suo motu by the Controller following a notification by the Central Government, where there is a national emergency, extreme urgency, or a case of public non-commercial use. The mechanism starts when the Government notifies in the Official Gazette that extraordinary circumstances require compulsory licences for patents addressing the exigency. Note that Section 92(2) still requires a person interested to apply to the Controller for the grant.
What has actually happened
Natco v. Bayer (2012) — the only grant. India’s first and, to date, only compulsory licence was granted on 9 March 2012 to Natco Pharma for generic production of Bayer Corporation’s Nexavar (sorafenib), used to treat liver and kidney cancer. All three Section 84 grounds were made out: the reasonable requirements of the public were unsatisfied, the drug was not available at a reasonably affordable price, and the invention was not being worked in India.
The pricing gap was stark. Bayer offered the drug at about ₹2.8 lakh for a month’s therapy; Natco offered to sell at a fraction of that — around ₹8,800.
The decision signalled that the government would prioritise the interest of the public at large over a maximally strict patent-protection regime. It drew sharp criticism from multinational companies, who argued the power should be exercised far more stringently.
BDR Pharmaceuticals (Dasatinib). Mumbai-based BDR Pharmaceuticals sought a compulsory licence for generic production of Bristol-Myers Squibb’s anticancer drug Dasatinib (sold as Sprycel). The Patent Office rejected the application on the ground that BDR had not made sufficient efforts to obtain a voluntary licence first — a threshold requirement that is easy to underestimate.
At the time of writing there were reports that the Health Ministry had sought a patent-rights waiver for Dasatinib under Section 92, citing a public health crisis, with government schemes to fund making the drug available for public non-commercial use. That waiver was never issued — the Section 92 route has remained unused for pharmaceuticals.
Lee Pharma (Saxagliptin). The third application, by Lee Pharma over AstraZeneca’s diabetes drug Saxagliptin, was also refused. The Controller held the applicant had failed to prove unmet public requirement, unreasonable pricing (comparable drugs were similarly priced), or demand justifying local manufacture. We covered that decision and its evidentiary lessons in our note on the Saxagliptin refusal.
Where it stands
More than a decade on from Natco, the position is unchanged: one compulsory licence granted, the subsequent applications refused, and Section 92 never invoked for a pharmaceutical patent. The provisions are real and available, but the evidentiary burden on an applicant — particularly on affordability and on prior efforts to negotiate a voluntary licence — has proved decisive in every case since.
India faces a distinctive challenge. Given the vast disparity in the economic conditions of its citizens, it is genuinely hard for the government to balance strict compliance with international standards of patent protection against safeguarding public health and well-being. That tension has not been resolved; it has simply been managed by using the power sparingly.
The takeaways
- Section 84 allows an application three years after grant — on public requirement, affordability, or non-working.
- Section 92 covers national emergencies and public non-commercial use, on a government notification.
- Only one licence has ever been granted — Natco over Bayer’s Nexavar in 2012.
- Failing to seek a voluntary licence first sinks applications — as BDR discovered.
Frequently asked questions
When can a compulsory licence be sought in India? Under Section 84, three years after the patent is granted, by any person interested, on grounds of unmet public requirement, unaffordable pricing, or the invention not being worked in India.
How many compulsory licences has India granted? One — to Natco Pharma in 2012 for Bayer’s Nexavar. Later applications by BDR Pharmaceuticals and Lee Pharma were refused.
Must an applicant first try to obtain a voluntary licence? Yes — BDR’s application was rejected precisely because it had not made sufficient efforts to obtain a voluntary licence from the patentee.
What is a Section 92 compulsory licence? One issued following a Central Government notification in cases of national emergency, extreme urgency, or public non-commercial use — though a person interested must still apply to the Controller.