Owning a patent feels like winning the ultimate protection for your invention—but what if that protection isn’t absolute? What if the government steps in and says, “Your innovation serves a greater public need, and others must be allowed to use it”?
That’s where compulsory licensing under the Indian Patent Act, 1970, comes in. It’s a mechanism designed to balance two forces—your right as an inventor to profit from your creation, and society’s right to access essential products, especially in sectors like healthcare, energy, and technology.
So if you’ve ever wondered whether the government can force a patent holder to license their invention—or under what conditions that can happen—this is where the story unfolds. Let’s break down how, when, and why compulsory licensing works, and what it means for inventors, businesses, and the future of innovation in India.
1. Introduction: When Innovation Meets Public Interest
Imagine you’ve worked for years developing a life-changing invention, perhaps a groundbreaking medicine, a clean energy device, or a data encryption system. You’ve secured your patent and believed your rights are exclusive. But what if the government suddenly says, “We need your patented product to serve the public, and someone else will make it, even without your consent.”
Sounds alarming? Welcome to the concept of compulsory licensing under the Indian Patent Act, 1970.
The Indian patent system respects inventors’ rights but also recognizes that these rights come with public responsibilities. Patents are not meant to be tools of monopoly that deprive people of access to essential goods, especially medicines, healthcare technologies, and life-saving devices.
Compulsory licensing is one of the legal procedures that ensures this balance between private rights and public welfare. It allows the government or a third party to use or manufacture a patented invention without the patentee’s authorization, under specific, controlled conditions.
Let’s understand how, when, and why this can happen, and what lessons inventors and businesses can learn from it.
2. The Legal Foundation: Compulsory Licensing under the Indian Patent Act, 1970
Compulsory licensing in India is primarily governed by:
- Section 84 – Compulsory licences.
- Section 92 – Special provision for compulsory licences on notification by the central government.
- Section 100 – Power of the Central government to use inventions for the purpose of government.
- Section 101 & 102 – Right of third parties in respect of use of invention and acquisition of invention by the central government.
Each section serves a different purpose, ensuring flexibility while protecting both the public interest and the rights of patentees.
3. Section 84 – When the Public’s Needs Aren’t Met
Under Section 84(1), after three years from the grant of a patent, any person can apply for a compulsory license on one or more of the following 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.
- The patented invention has not worked in India.
Section 84 acts as a safety valve in the patent system. It ensures that inventors do not hold patents merely as paper rights without real-world application.
For example, if a company holds a patent for a life-saving drug but chooses to import only limited quantities at exorbitant prices, the public’s reasonable needs are not met. Similarly, if the patented technology is not manufactured in India, it may restrict accessibility and affordability.
The government, through the Controller of Patents, can then issue a compulsory license to another manufacturer, allowing them to produce and sell the patented product in India, subject to payment of a reasonable royalty to the patentee.
4. Section 92 – When Public Emergencies Demand Immediate Access
If the Central Government is satisfied that there is a national emergency, extreme urgency, or a case of public non-commercial use, it may notify the Controller to grant compulsory licenses for relevant patents without waiting for the usual three-year period.
Section 92 empowers the government to act swiftly in situations like:
- Health crises (e.g., pandemics, epidemics, or shortage of essential medicines),
- Natural disasters,
- Defence or public safety requirements.
In such situations, the procedural requirements are relaxed the license can be issued immediately without prolonged hearings. The Controller determines a fair royalty to be paid to the patentee, balancing urgency with fairness.
Example:
During the COVID-19 pandemic, discussions around Section 92 resurfaced globally, especially concerning the patents of vaccines, oxygen concentrators, and antiviral drugs. Though India did not invoke it during COVID-19, Section 92 remains a powerful legal tool in times of crisis.
5. Section 100 – When the Government Uses Patented Inventions
Section 100 allows the Central Government, or any person authorized by it, to use any patented invention for government purposes.
This could include:
- Manufacturing defence equipment,
- Procuring medicines for public hospitals,
- Using technology in public projects.
The patentee is entitled to adequate compensation (royalty) but cannot refuse authorisation once Section 100 is invoked.
This is not a compulsory license in the traditional sense; it’s more of a direct government intervention for public use, with compensation ensured. It balances urgency and fairness.
6. The First and Most Famous Case: Natco Pharma vs Bayer Corporation (2012)
In 2012, India witnessed its first-ever compulsory licensing case: Natco Pharma vs Bayer Corporation.
Bayer held the patent for Sorafenib Tosylate (Nexavar), a life-saving drug used to treat kidney and liver cancer. However, Bayer was importing the medicine only in limited quantities and selling it at an extremely high price of about ₹2,80,000 per month, making it unaffordable for most Indian patients. Natco Pharma applied for a compulsory license, arguing that the drug was not being manufactured in India and was priced beyond reach. The Indian Patent Office agreed and, in March 2012, granted Natco a compulsory license under Section 84 of the Patents Act. Natco was permitted to sell the drug at a drastically reduced price of ₹8,800 per month, while Bayer received a 7% royalty on Natco’s sales.
This landmark decision reinforced that patents must serve public interest and not merely commercial motives, highlighting India’s stance on balancing intellectual property rights with affordable access to healthcare, in line with the TRIPS Agreement (Article 31).
7. Section 92A – Compulsory Licensing for Export of Medicines
Section 92A allows the grant of compulsory licenses for export of patented pharmaceutical products to countries that lack manufacturing capacity, particularly least-developed nations (LDCs).
This provision strengthens India’s position as the “pharmacy of the world”, enabling affordable access to medicines globally while staying within international IP norms.
8. Balancing the Equation: Rights vs. Responsibilities
Compulsory licensing is not about punishing inventors; it’s about ensuring that the patent system remains equitable and functional.
From an inventor’s perspective, here’s how to avoid compulsory licensing risks:
Work your patent in India: Set up local manufacturing or technology transfer.
Maintain reasonable pricing, especially for essential goods and medicines.
File timely Form 27 (Statement of Working): This document declares whether and how your patent is being commercially worked in India.
Engage in voluntary licensing: Before disputes escalate, license your technology at fair rates.
These proactive steps not only prevent compulsory licensing but also foster goodwill and sustainability.
9. Practical Insights for Professionals and Businesses
For IP professionals, legal advisors, and R&D managers, compulsory licensing is an important strategic consideration:
During patent drafting, avoid overly broad claims that could invite public interest scrutiny.
In portfolio management, consider tiered pricing models or voluntary licenses to avoid compulsory measures.
In technology commercialization, understand when compulsory licenses are likely, especially in sectors like pharma, energy, and health.
For startups and small entities, compulsory licensing offers opportunities too they can legally access patented technologies to develop affordable alternatives, once approved by the Controller.
10. The Road Ahead: Compulsory Licensing in the Modern Era
As India transitions toward becoming a global R&D hub, compulsory licensing remains a rare but essential safeguard. Future debates may expand their relevance beyond pharmaceuticals to:
Green technologies (e.g., carbon capture, hydrogen fuel cells),
AI-driven medical diagnostics, and
Pandemic preparedness tools.
The key challenge for policymakers will be to maintain innovation incentives while ensuring public accessibility.
11. A Balance Between Monopoly and Humanity
Compulsory licensing under the Indian Patent Act, 1970, is not a loophole; it’s a lifeline. It ensures that patent rights do not become barriers to essential public access. Sections 84, 92, 92A, and 100 together form a strong yet balanced framework where innovation and public interest co-exist.
“Your rights are powerful, but with power comes responsibility.”
By working their patents in India, keeping prices fair, and aligning innovation with societal needs, inventors can ensure that they remain partners in progress, not obstacles to it.
And for the public, compulsory licensing stands as a legal assurance that innovation will always serve humanity, not the other way around.
We don’t just protect patents at R K Dewan & Co.; we protect purpose, too. As one of India’s best patent law firms, we do more than just file papers and follow the rules. We help inventors, researchers, and businesses plan for problems like mandatory licensing, follow India’s patent rules, and protect their rights in a smart way. With over 75 years of experience and a team of patent attorneys, technologists, and legal experts from different fields, we help clients with all aspects of the Indian Patent Act, from drafting and prosecution to licensing, enforcement, and government use. R K Dewan & Co. gives you clear, accurate, and long-term IP protection that is built for a world that is always changing, whether you are protecting a groundbreaking new idea or figuring out complicated public-interest rules.
