Compulsory Licensing in India: Impact on EU Investments

The adoption of Compulsory Licensing (CL) in various industrial sectors in India could potentially hinder the influx of foreign capital and technology, warns a senior official from the European Union (EU).

• This statement has surfaced amidst the final stages of India's National Intellectual Property Rights (IPR) policy formulation and the reinitiation of bilateral discussions between the EU and India regarding a proposed Free Trade Agreement (FTA).

Understanding Compulsory Licensing (CL)

• CL refers to the government's authorization allowing entities to use, manufacture, import, or sell a patented product without the need for the patent owner's approval.

The India-EU Free Trade Agreement (FTA)

• The anticipated India-EU FTA is expected to encompass clauses related to IPR protection, which includes CL.
• Likewise, the IPR policy is anticipated to address CL as it is also a component of India's Patents Act.
• According to the World Trade Organization's TRIPS (IPR) Agreement, CL is permissible provided it meets certain conditions such as 'national emergencies, extreme urgency and anti-competitive practices'.

The Role of National Manufacturing Policy (NMP)

• The National Manufacturing Policy (NMP) of India also advocates for the application of CL across various manufacturing sectors, especially to gain access to patented green technologies.
• The government is leveraging the NMP to ensure the success of its 'Make In India' initiative.
• The NMP gives entities like the Technology Acquisition and Development Fund the option to request the government for a CL if the patent holder is not providing the technology at reasonable rates or is not meeting the domestic demand satisfactorily.
• However, the NMP clarifies that such CLs will only be issued within the parameters of the TRIPS Agreement, assuring a reasonable royalty to the patent holder.

History of Compulsory Licensing (CL) in India

• To date, India has only issued one CL. This was given to Natco Pharma in March 2012, allowing them to manufacture Nexavar, an anti-cancer drug patented by Bayer.