How Does India’s Patent Law Regulate Licensing?

In India, patent licensing is an important aspect of the intellectual property system, allowing patent holders to grant others the right to use their inventions under agreed terms. The Indian Patent Act regulates both voluntary and compulsory licensing, ensuring that the interests of both patent holders and the public are balanced.

Regulation of Licensing Under Indian Patent Law

Voluntary Licensing:

• Exclusive License: The patent holder can grant an exclusive license to a licensee, which means the licensee has the sole right to use the patented invention within the agreed territory or market. The licensee cannot grant sublicenses without the patent holder’s consent.
• Non-Exclusive License: This type of license allows the patent holder to grant multiple licenses to various licensees, allowing several parties to use the patented invention.
• Royalty and Agreement: The terms of the license, including the payment of royalties, are negotiated between the patent holder and the licensee. A formal agreement is signed to establish the rights and obligations of both parties.

Compulsory Licensing:

• Definition: Under Section 84 of the Indian Patent Act, compulsory licensing allows the government to grant a license to a third party to use a patented invention without the consent of the patent holder, under certain conditions.
• Conditions: Compulsory licensing can be issued if the patented invention is not being worked in India, if it is not available to the public at an affordable price, or if the public’s requirements are not adequately met.
• Appeal: The patent holder can appeal against a compulsory license, but the license remains valid until any changes are made by the judicial authorities.

Obligations of the Patent Holder:

• Duty to Work the Patent: Patent holders must make their patented inventions available and work them in India. If they fail to do so, they may face the risk of compulsory licensing.
• Fair and Reasonable Terms: The patent holder must offer licenses under fair and reasonable terms, avoiding any misuse of the patent to stifle competition or prevent the availability of affordable products.

Obligations of the Licensee:

• Respect for Patent Rights: The licensee must respect the terms of the licensing agreement and pay the agreed royalties. They must also acknowledge the patent holder's rights over the invention.
• Non-Disclosure: The licensee must adhere to confidentiality clauses in the agreement and refrain from disclosing any proprietary information related to the invention.

Example:

If a pharmaceutical company holds a patent for a life-saving drug but is unable to meet the demand at affordable prices, a third-party company can seek a compulsory license under Section 84 of the Indian Patent Act to produce and distribute the drug. The patent holder may object, but the government may grant the license if it is proven that the drug is not available to the public at reasonable prices. This ensures public access to essential medicines while still respecting the patent rights of the original holder.