Licensing as a Solution to looming issues in Patent Law

Licensing as a Solution to looming issues in Patent Law

This article on ‘Licensing as a Solution to looming issues in Patent Law: An Analysis’ was written by Ashok Kumar Choudhary, an intern at Legal Upanishad.


Patents have become increasingly important in recent years due to significant advancements in science and technology, including ICT and biotechnology. As a result, innovation processes have shifted from being centred on individual companies to relying on interactions between multiple public and private sector actors on a global scale.

Patent regimes have adapted to cover more comprehensive domains of patentable subject matter, resulting in more robust and valuable patents, particularly in biotechnology and software. As businesses and public research organizations navigate the competitive and complex global economy, patents have become a critical tool to protect their inventions.


  • India’s patent law system is widely recognized for its efforts to promote public interest and access to essential medicines. The Patent Act of 1970 allows for compulsory licensing in certain circumstances, including for public health emergencies. This provision has enabled generic drug manufacturers to produce and distribute life-saving drugs at affordable prices, contributing to global efforts to improve access to medicine. India’s patent law also recognizes the unique concept of traditional knowledge, which refers to the knowledge, skills, and practices developed and preserved by indigenous communities.
  • Patents in India are granted for 20 years and are territorial, meaning they only apply in the country where they are given. Any legal action or infringement case must be taken within that country. One notable aspect of Indian patent law is its provision for compulsory licensing in certain conditions such as public health emergencies, allowing companies to make and distribute patented products without the patent holder’s permission. This provision has helped to produce affordable medicines, making essential drugs accessible to everyone.
  • Patent law serves the dual purpose of incentivizing innovation and protecting the interests of inventors. However, there are instances where patent law can create issues such as monopolies, high prices for essential medicines, and obstacles to research and development. In such cases, licensing can be a solution to address these issues. Licensing involves granting permission to use or sell a patented invention. This can be voluntary, where the patent owner chooses to license the invention, or compulsory, where the government orders the patent owner to license the invention in the more significant public interest.
  • Patent rights are a critical component of intellectual property law as they provide property rights to the patent owners, effectively prohibiting third parties from making, selling, or using a product or process without the owner’s permission within the jurisdiction where the patent is in force. Patent rights give the exclusive right to the patent owner, who also has the power to issue licenses to third parties. These licenses are generally voluntary and used to facilitate the dissemination of technology and innovation. However, in situations such as public health crises or other public interest cases, the competent national authorities can issue a compulsory or non-voluntary license. Such licenses are defined under the Paris Agreement of 1883, Section 5A (2).


The patent in India has been the subject of rising issues from the beginning there were many challenges in recent years.

  1. The patent system in India has faced various challenges since its inception. One of the major issues has been finding a balance between the interests of patent holders and the public interest. India is known for prioritizing public health, which has created conflicts with multinational pharmaceutical companies seeking to safeguard their patent rights and intellectual property.
  2. The Patent Act of 1970 governs the patent system in India and outlines the procedure for patent examination. The slow pace of patent examination and granting in India has resulted in a substantial backlog of patent applications and delayed the commercialization of new technologies. The Indian government has made several efforts to address this issue by increasing resources and streamlining the patent examination process.
  3. High prices of essential medicines are one of the most significant challenges in patent law. Patent law grants patent owners the exclusive right to manufacture and sell their patented medicines, resulting in high prices that can be unaffordable for many patients. Compulsory licensing can be a solution to this problem by allowing other companies to produce and sell the same medicine at a lower price, making it accessible to a wider population.
  4. Patents in certain industries, such as the technology sector, can create monopolies. A single company may hold a patent for a critical technology, preventing other companies from using or developing that technology. This can stifle competition and hinder innovation. Voluntary licensing can be a solution to this problem by allowing companies to license the patented technology and use it in their products, promoting innovation and competition.
  5. Patent law can create obstacles to research and development in various cases. For example, in the field of genetics, patents on genes and genetic sequences can prevent researchers from studying or developing new treatments related to those genes. Compulsory licensing is a solution to this issue by allowing researchers to use patented genes or sequences for research purposes.
Licensing as a Solution to looming issues in Patent Law
Licensing as a Solution to looming issues in Patent Law


The Indian patent act 1970 offers the Indian government many options to address and modify the patent rights in various emergencies like health pandemics and more one of which we have addressed in the situation of COVID-19 these provisions are classified as follows.

When the world was facing the pandemic and there was no clue how to deal with the virus and everyone was stuck to figuring out the solution or medicine for that virus many companies were prepared and forget their patent rights entirely even stated in public conferences that they do not seek any protection for any medicine or solution they come up with (Companies like ABBVIE is us based company which decided to not to enforce a patent for its drug ‘KALETRA’ that was tested for COVID 19)


  • The Indian Patent Act contains a provision that allows the government to make use of a patented invention for public purposes, including in times of national emergency, which is mentioned in Section 100. The government may notify the patentee that they want to use the invention and negotiate the terms. If they can’t reach an agreement, then the government can use a compulsory license to use the invention. The patentee will be entitled to receive adequate remuneration, which is mentioned in Section 102.
  • The exact interpretation of ‘merely of its use’ was extended in the case of Chemtura Corporation vs Union of India and Ors 2009. The honourable court expanded this interpretation to include any department of the government, its servants, and agents performing assigned duties. The use must be exclusive for the government or its department, and any end-use outside this scope is not permitted. The government has the power to import medicines or drugs for distribution in public service institutions like hospital dispensaries and other medical institutions.
  • In times of a public health crisis, like the current COVID-19 pandemic, the Government can issue Compulsory Licenses to bypass the three-year wait time for new patent applications. This particular power is not available to private entities. However, the wide discretion of the Controller in granting a Compulsory License can lead to dissatisfaction among patentees and even trade retaliation or political pressure, as seen in past instances. Despite these challenges, issuing a Compulsory License can save valuable time in making the invention available in the country.
  • The Government can acquire granted or pending patents in exchange for compensation and allow local companies to manufacture the drug/vaccine. However, this could involve price regulation by the Government, and the patentee may be unable to recover their investment, potentially discouraging future research and development. If no compensation agreement is reached, it becomes the duty of the High Court to determine it, which could delay the process of making the product accessible to the public.


Licensing can be a useful tool in addressing challenges in patent law. Voluntary licensing can promote competition and innovation, while compulsory licensing can provide solutions to issues such as high prices for essential medicines, access to technology, and research obstacles. However, it is crucial to balance the interests of patent owners and the public to ensure that patent law serves its intended purpose of incentivizing innovation and safeguarding the wider population’s interests.

In the case of a new patent application for a COVID-19 drug or vaccine, it would be impossible for a private firm to apply for a compulsory license if the three-year waiting period is prescribed under the law. However, the government has the power to bypass this waiting period in specific extraordinary situations, as the COVID-19 pandemic has justified.

Despite this solution, granting a Compulsory License can result in patentees being dissatisfied with how their commercial interests are addressed, as the Controller has wide discretion in the terms and conditions of the grant. Past instances of Compulsory Licensing have also resulted in threats of trade retaliation and political pressure by the host country of (foreign) patentees, such as in the case of NATCO Pharma’s grant of a Compulsory License for the drug Nexavar. Overall, it is essential to consider the pros and cons of licensing and to strike a balance that incentivizes innovation while ensuring access to essential medicines and technology for the wider population.