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Compulsory Licensing: Is it a non-starter or a failure of the nation?


Milind Sathe, Author, Compulsory Licensing in Knowledge Economy, in this article, elucidates on aspects of CL that are globally relevant

Milind Sathe

There are few examples of compulsory licensing (CL) around the globe. Many nations have made some or the other provisions, but interestingly these are seldom used. CL can provide a potential solution to many problems. Some nations are yet to succeed in ensuring adequate medical and healthcare support to their population. Sectors of vital importance are monopolised by foreign entities and patents are not worked. There is an exodus of national wealth. One of the major contributing factor is ignorance of CL provisions as per the law of the land. As the topic is not litigated frequently, there are fundamental queries regarding the interpretation. Promising provisions that can lift and revive economy and industry are gathering dust. There is a need to dissect the legal provisions. A vibrant global debate is required. Why, what, when has to be discussed on multiple forums.

Why CL?

Besides its socially useful aspects, CL is also a potent strategy for revival of economy and industrial operations. CL is means to demonstrate that there exists a live and vibrant sovereign. Effective use of CL manifests that the population of nation lives in a knowledge economy. It reveals that the domestic laws of a nation are not mere paper achievements but IP offices in the nation and the population is concerned about the nation and does not tolerate misuse or abuse of the law.

It guards social aspects that are covered by relevant sections of The patents Act of the nation e.g. Sections 83, 84, 89, 91 and 92 in case of India. Industrial aspects which reveal the awareness of the industry speak about orientation towards the nation and the globe, consumer orientation and concern about the economy of the nation.

Administrative aspects reveal the readiness or willingness of the sovereign bodies dealing with IP laws and the administrative abilities of the industrial houses of the nation.

Public demand for effective use of CL provisions or its absence is an indicator of the awareness of the population about IP laws and its possible misuse or abuse by monopolists. It indicates that the population is still backward, not concerned about intellectual colonisation and hence a perfect prey for intellectual slavery.

Prerequisites for effective use of CL provisions

There should be well defined legal provisions that would instil clarity as to when CL can be invoked. These provisions should enable quick invoking of CL. These should stipulate durations which will not dilute the spirit of emergency. If a particular situation is a national emergency or in circumstances of extreme urgency it should not be allowed to be decided over a period exceeding a month. Time and rival nations or intellectual invaders are not concerned about nation’s inability or impotent provisions. Laws of the nation are designed to protect the interests of its population. Ambiguity and longer durations of processing the CL is not beneficial for the subject population. It is beneficial to intellectual invaders which are ruthless. Intellectual invaders are a modern form of colonisers looking to exploit nations and their economy. Exhibiting a lethargic or unconcerned approach to CL and its use manifests political and administrative backwardness, a costly affair to sustain in economic invasions in knowledge economy.

Should a nation take proactive steps to decide if a patent is open for CL or should it wait for somebody to apply for CL? Why do border security forces of any nation guard their borders round the clock? Why don’t they wait for somebody to complain that there is an invasion? If a nation guards its geographical borders round the clock and does not guard its freedom to operate in intellectual and industrial plane in a knowledge economy, what should its population and industry conclude? Should its populace conclude that the apex institute of the nation still lives in the past and has not realised the invasive games of knowledge economy? Should one conclude that political and administrative inertness is a covert invitation to invite invaders to capture the nation? Should its people conclude that the apex institution is unaware of its intellectual sovereignty, the intangible map of its boundaries? If nations are not concerned about their intellectual area, how will they detect invasion on their sovereignty?

IP offices of the DCs and LDCs should provide conclusive details of prosecution of the concerned patent application, granted patent, its use within the period of four years from the date of application as per Paris and TRIPs provisions, other assignments if any and if these assignments are trustworthy. An assignment which is for insignificant consideration should be acquired by the nation by law as is often provided in laws of the nation dealing with tangible property to curb suspicious transactions.

Enquiry into economical and legal aspects

If the patented object is not indigenously produced but imported then its import price and the price at which it is available to the consumer should be a matter of scrutiny. Whether the imported quantities are distributed within the nation or are exported should be another matter of scrutiny.

If the imported or locally worked compositions are exported due to the reason that there is no sale in the local market or for any other reason, is it not direct evidence that prices are unaffordable?

If the prices or revenue earned by exports is more than the earnings by sale in the native or domestic market, doesn’t it mean that the patent applicant or the patentee is not conforming to the conditions of the grant if any, which might be dictated in the law of the land?

If majority of the imported quantities are not available in the local market, can it be considered as local working? If yes, why? If no, why?

Should laws of the nation spell out the criteria for local working? Should dispersing or distributing insignificant quantities in the local market be considered as an act to defeat the purpose of the law? If yes, why? If no, why?

Is it related to local consumption? Is it produced in an industrial area which is identified for 100 per cent export? If it is not produced in such an area, should it be labelled as local working? Has your nation signed any agreement which defines local working or provides guideline to interpret local working? Sovereign should define local working that is beneficial to its national goals. Are mere imports which render the patented product unaffordable or unavailable be considered as local working of the patent? If yes, why? If no, why?

Legal provisions should empower IP offices to neutralise the patent when it does not conform to domestic provisions, equivalent to provisions of TRIPs or Paris convention about the period within which the patent should be worked. Patentee should be given the liberty to prove its position for the delay after the decision. Not more than two extensions should be granted. During this extension period, freedom should be given to other industrial rivals to work the invasion. If the patentee succeeds in working the invasion, the industrial rival should be stopped from working the invention thereafter. Ability of the other industrial player to work the invasion prior to the patentee is a significant event.

The extent of reduction in price by CL applicant should not be a matter of litigation if the domestic laws have not defined any criteria for appropriateness of low price. A third CL applicant which offers still lower price should be allowed to operate as his price will be the lowest and so on. This will promote price war even in monopolised items, spread technologies and generating employment opportunities.

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