Assignment and Compulsory Licences under Patent Act 1970

Assignment of Patents :

Sec 68 of the Patents Act, 1970, provides for the assignment:

1. Of the patents
2. Of a share in the patent

Sec.68 also provides for the mortgage of, licence in or creation of any interest in the patent but the assignment of patent or of a share in a patent or in the creation of any interest in the patent is valid if:

• Such assignment, mortgage or creation of interest in the patent is reduced to the form of document.
• Such document embody all the terms and conditions governing the rights and obligation of the patentee and the assignee ,or the mortgagee or the person in whose favour the interest in the patent is created.

According to the (Amendment) Act, 2005 sec 68 has been substituted by new section:

An assignment of a patent or of a share in a patent, a mortgage licence or the creation of any other interest in a patent, shall not be valid unless the same were in writing and the agreement between the parties concerned is reduced to the form of a document embodying all the terms and conditions governing their rights and obligations and the application for registration within 6 months from the commencement of this Act.

Registration of Assignment: Section 69 of the Patent Act, 1979 provides for the registration of the assignment.

• Any person who becomes entitled to a patent
  • by assignment or
  • by transmission of patent
  • by operation of law

may make an application to the Controller for the registration of the title of the patent in his name.

Similarly, a person who acquires an interest in the patent by mortgage, etc. may make an application to the Controller of patents for the notice of the interest acquired by him in the patent.

Licences in patents:- The licences to work the patented invention may be granted in the favour of another person voluntarily by the patentee himself.

Licences granted under the Patents Act, 1970, may be divided into three categories as follows: –

1. Voluntary licence

Voluntary licence means licence granted in a patented invention by the patentee himself voluntarily in the favour of another person. A patentee may grant voluntary licence in his patented invention in the favour of another person Voluntary licence is granted in the form of a document embodying all the terms and conditions governing rights and obligations pf the patentee and licensee.

Time period for the agreement between the patentee and licensee with Controller within six months from its execution.

After the Amendment Act 2005 it states:-

An assignment of patent or of share in a patent, a mortgages, licence or the creation of any other interest in a patent shall not be valid unless the same were in writing and the agreement between the parties concerned is reduced to the form of a document embodying all the terms and conditions governing their rights and obligations and duly executed.

2. Compulsory licence

Section 84 provides for the grant of compulsory licences .At any time after the expiration of three years from the date of 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 requirement of the public with respect to the patented invention have not been satisfied
2. That the patented invention is not available to the public at a reasonably affordable price
3. That the patented invention is not worked in the territory of India

An application for the grant of compulsory licence may be made by any person including licence holder. No person is to be stopped from alleging that the reasonable requirement of the public with respect to the patented invention are not satisfied or that the patented invention is not worked in India or that the patented invention is not available to the public at a reasonable affordable price.

Procedure for granting Licence :

• Where the Controller is satisfied, upon consideration of an application under section 84, Or section 85, that a prima facie case has been made out for the making of an order, he shall direct the applicant to serve copies of the application upon the patentee and any other person appearing from the register to be interested in the patent in respect of which the application is made, and shall publish the application in the official journal.
• The patentee or any other person desiring to oppose the application may, within such time as may be prescribed or within such further time as the Controller may on application (made either before or after the expiration of the prescribed time) allow, give to the Controller notice of opposition.
• Any such notice of opposition shall contain a statement setting out the grounds on which the application is opposed.
• Where any such notice of opposition is duly given, the Controller shall notify the applicant, and shall give to the applicant and the opponent an opportunity to be heard before deciding the case,

Case Law: –

F.Hoffmann -La Roche Ltd and Another v. Cipla Limited 2009

The Court observed that the question of availability of the drug at affordable price was provided by way of provisions for compulsory licensing Since the legislative intent was to grant a monopoly to the patent holder for at least the first three year after the grant of patent to enable it to recover the enormous costs incurred in research and development of the product, the court should not override such legislative intent on the basis of untested principles.

Natco Pharma Ltd v. Bayer Corporation 15th March, 2012 “India allows compulsory licensing of Bayer’s anticancer drug Nexavar to Natco Pharma”.

Bayer, a German Pharma patented on the active pharmaceutical ingredient called Nexavar in 2008 to treat liver and kidney cancer in India. But the company failed to reach the requirements of the public.

The reasons for the failure were

• The drug is exorbitantly priced and out of reach of most of the people.
• The drug which is a “lifesaving drug” was frequently in short supply even in cities.
• Failed to manufacture the drug in India even after four years from the patent grant date and further failed to grant voluntary licence for manufacturing in India.

As these figures clearly demonstrate the neglectful conduct of the Patentee as far as India is concerned, it forced the Indian Government to pass an order of compulsory license (CL) to NATCO Pharma, based in Hyderabad against Bayer’s patent on drug Nexavar on March 09, 2012, which is India’s first compulsory license.

Terms and conditions of compulsory licences—Section 90

 In settling the terms and conditions of a licence under section 84, It shall be the duty of Controller to secure following conditions:

1. That the royalty and other remuneration, if any, reserved to the patentee or other person beneficially entitled to the patent, is reasonable, having regard to the nature of the invention, the expenditure incurred by the patentee in making the invention or in developing it and obtaining a patent and keeping it in force and other relevant factors;
2. That the patented invention is worked to the fullest extent by the person to whom the licence is granted and with reasonable profit to him;
3. That the patented articles are made available to the public at reasonably affordable prices;
4. That the licence granted is a non-exclusive licence;
5. That the right of the licensee is non-assignable;
6. That the licence is for the balance term of the patent unless a shorter term is consistent with public interest;
7. That the licence is granted with a predominant purpose of supply in the Indian market and that the licensee may also export the patented product if need be in accordance with the provisions of sub-clause (iii) of clause (a) of sub-section (7) of section 84;
8. That in the case of semi-conductor technology, the licence granted is to work the invention for public non-commercial use;
9. That in case the licence is granted to remedy a practice determined after judicial or administrative process to be anti-competitive, the licensee shall be permitted to export the patented product, if need be.

As per sub section 2 of Section 90 :  No licence granted by the Controller shall authorise the licensee to import the patented article or an article or substance made by a patented process from abroad however the Central Government may, if in its opinion it is necessary so to do, in the public interest, direct the Controller at any time to authorise any licensee in respect of a patent to import the patented article or an article or substance made by a patented process from abroad.