Compulsory licence

India is one of the few countries that has actually granted one, and the reasoning is worth understanding even if you never encounter it.

In simple words

A licence granted by the Controller to a third party, without the patentee's consent, on an application made after three years from grant, on grounds including that the reasonable requirements of the public have not been satisfied, that the invention is not available at a reasonably affordable price, or that it is not worked in the territory of India.

Think of it as

The State overriding the monopoly, on stated grounds, for a royalty.

Why it matters

The first Indian compulsory licence, over a cancer drug, was upheld on all three grounds. The reasoning is important beyond pharmaceuticals: it treated “adequate extent” for a medicine as meaning supply to the fullest extent, and held that a patentee relying on importation rather than local manufacture has to justify that choice.

A simple example

A patented medicine supplied to a tiny fraction of the patient population, at a price out of reach of nearly all of it, was held to satisfy the statutory grounds; a royalty was set as a percentage of net sales.

Common mistake

Believing a compulsory licence cancels the patent. It does not - the patent remains in force and the licensee pays a royalty.

Where it comes from

Patents Act 1970, sections 84 to 92; Bayer Corporation v Union of India, Bombay High Court, 15 July 2014