India: Patent Does Not Confer Absolute Monopoly

Last Updated: 15 May 2018
Article by Suchi Rai

The patent right is not an absolute right. It is a fettered right and is subjected to certain specific prescribed constraints. The Patents Act balances well between individual rights of patentee and the interest of general public. A patent does not grant absolute monopoly. Along with giving protection to the right-holder for his invention, the Act is also aware of the interest of public; the main purpose of Act being encouragement of the development of technology and innovation.

The Patent Act provides protection to an inventor for his invention, giving him exclusive right over the invention and protection from infringement or unauthorized use of the invention by others. Under the Patents Act, government confers exclusive rights on the Patentee, where the invention cannot be used by others without the authorization of patentee.

Section 48 of the Indian Patents Act provides the rights of patentee under the act. The section confers upon the patentee the exclusive right to prevent third parties from the act of making, using, selling or importing that product in India if the subject matter of the patent is a product. Similarly, if the subject matter of the patent is a process, the patentee has the exclusive right to prevent third parties from the act of using the process for sale, selling the product obtained directly by that process in India.

These rights of patentee are subject to certain conditions specified in the Act. Section 47 provides certain conditions where exclusive rights of patentee are limited by certain specific acts:

  1. Any machine, apparatus, or other article in respect of which the patent is granted or any article made by using a process in respect of which the patent is granted, may be imported or made by or on behalf of the Government for the purpose merely of its own use;
  2. Any process in respect of which the patent is granted may be used by or on behalf of the Government for the purpose merely of its own use;
  3. Any machine, apparatus or other article in respect of which the patent is granted, may be made or used, and any process in respect of which the patent is granted may be used, by any person, for the purpose merely of experiment or research including the imparting of instructions to pupils; and
  4. In the case of a patent in respect of any medicine or drug, the medicine or drug may be imported by the Government for the purpose merely of its own use or for distribution in any dispensary, hospital or other medical institution maintained by or on behalf of the Government or any other dispensary, hospital or other medical institution which the Central Government may, having regard to the public service that such dispensary, hospital or medical institution renders, specify in this behalf by notification in the official Gazette.

There are certain other specified acts which do not amount to infringement of the rights of patent holder.

Section 49 provides that patent rights are not infringed when used on foreign vessels etc., temporarily or accidentally, in India. The use of the invention on board a vessel or aircraft registered in a foreign country or a land vehicle owned by a person ordinarily resident in such country, which comes to India (including the territorial waters thereof) temporarily or accidentally, will not infringe the rights of the Patentee. However, this will not apply to vessels, aircraft or land vehicles owned by persons ordinarily resident in a foreign country the laws of which do not confer corresponding rights with respect to the use of inventions in vessels, aircraft or land vehicles owned by person, ordinarily resident in India while in the ports or within the territorial waters of that foreign country or otherwise within the jurisdiction of its courts. As there is no commercial intention, there is no violation of patent rights.

There are certain other provisions in the act for the interest of general public.

Bolar-like provision and Parallel import provision

Some countries allow manufacturers of generic drugs to use the patented inventions for development and submission of information required under law- for example from public health authorities - without the patent owner's permission and before the patent protection expires. The generic producers can then market their version as soon as the patent expires. This provision is called "Bolar-like provision" or "regulatory exception". Indian Patents Act provides such a provision under Section 107A (a).

Parallel Import

Parallel import provisions are provided in Section 107A (b), which says that importation of patented products by any person authorized by the Patentee will not be considered as an infringement. Therefore, it is possible to import the patented products from the licensee of the patentee in any country without the permission of the Patentee. The purpose of Parallel import is to check the abuse of patent rights and meant to control the price of patented product.

Section 107A provides certain acts which shall not be considered as infringement. According to it, any act of making, constructing, using, selling or importing a patented invention solely for uses reasonably related to the development and submission of information required under any law for the time being in force, in India, or in a country other than India, that regulates the manufacture, construction, use, sale or import of any product, shall not be considered as an infringement of patent rights.

Also, the importation of patented products by any person, from a person who is duly authorized under the Law to produce and sell or distribute the product, shall not be considered as an infringement of patent rights.

Working of patented invention

Government makes sure that a patent is worked in India or that a patented product or a product obtained by patented process is commercially exploited in India and available in the market for general public. Government makes sure that there is no abuse of patent rights. Patents are granted for the purpose of encouraging inventions, which will enhance industrial development and, therefore, should be worked in its fullest extent within the territory of India.

Section 83 of the Act clearly mentions that the 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. Patents are not granted merely to enable patentees to enjoy a monopoly for the importation of the patented article. It aims to see that the patent right is not abused by the patentee or person deriving title or interest on patent from the patentee does not resort to practices which unreasonably restrain trade or adversely affect the international transfer of technology. Patents are granted to make the benefit of the patented invention available at reasonably affordable prices to the public. Patents granted do not in any way prohibit Central Government in taking measures to protect public health.

For this purpose, government mandates every patentee to submit a statement regarding working of the invention for every calendar year.

Statement regarding working of patent

Every patentee or his assignee is required by the government, to submit annually, a statement to show the extent to which the patented invention has been commercially worked in India. If this statement is not submitted within 3 months of the end of each calendar year, then the patentee is liable for a penalty. Non-submission of such information annually, leads to the possibility of grant of compulsory license on the patented invention to other persons to commercially exploit the patent.

The information required to be submitted regarding the working of invention is to show whether the invention has been commercially exploited or not i.e. it has been worked or not. If it is not worked then the reason behind its non-working status and the steps taken for its working are to be submitted. If it is worked then the details of quantum and value of the patented product manufactured in India and imported from other countries, the licences granted during the year and most important whether public requirement has been met partly/ adequately/ to the fullest extent at reasonable price, have to be submitted.

Compulsory Licences

Compulsory licences are available as a remedy against abuse of patent right, not working of patented invention and to address the public health concern in India.

  1. The provisions for compulsory licences are made to prevent the abuse of patent as a monopoly and to make way for commercial exploitation of the patented invention by an interested person.
  2. If a patented invention is not worked, then there arises possibility of grant of compulsory licences by controller on the said patent.

Under Section 84(1) of the Act - 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 patent on any of the following grounds:

  1. that the reasonable requirements of the public with respect to the patented invention have not been satisfied, or
  2. that the patented invention is not available to the public at a reasonably affordable price, or
  3. that the patented invention is not worked in the territory of India.

However, in the event of National Emergency or Extreme urgency or public non-commercial use including public health crisis, relating to Acquired Immuno Deficiency Syndrome, Human Immuno Deficiency Virus, tuberculosis, malaria or other epidemics, to avoid any delay in the procedure, provisions under section 87 will not apply. The compulsory licence will be granted immediately under section 92 (3) with the terms and conditions that the articles manufactured under the patent shall be available to the public at the lowest prices.

Section 92 A - Compulsory licence for export of patented pharmaceutical product in certain exceptional circumstances. It says compulsory licence shall be available for manufacture and export of patented pharmaceutical products to any country having insufficient or no manufacturing capacity in the pharmaceutical sector for the concerned product to address public health problems, provided compulsory licence has been granted by such country or such country has, by notification or otherwise, allowed importation of the patented pharmaceutical products from India.

This provision is introduced to address the public health concerns of the countries having insufficient or no manufacturing capacity in the pharmaceutical sector to implement the decision of the TRIPS council on Para 6 of the Doha Declaration on TRIPS Agreement and Public Health. This section lays down the conditions that are required to be fulfilled, when the compulsory licences for export purposes will be available. The compulsory licence is available only for:

  1. the patented pharmaceutical product;
  2. manufacture and export to any country having insufficient or no manufacturing capacity in the pharmaceutical sector;
  3. the product addressing the public health problems in such country.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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