Is it Time for India to Issue its Second Compulsory License – The COVID-19 Vaccine


Mark Harris Getty, the co-founder of the British-American Company Getty Images, once opined that Intellectual Property is the oil of the 21st Century. But in a world which is attacked by a deadly virus how relevant Intellectual Property is today? As the coronavirus impact intensifies across the world, the search for a vaccine also gains momentum not only in India but worldwide. There are a number of never-faced-before legal conundrums surrounding the outbreak of this virus. But what if we actually come up with a made in India vaccine that is effective against Covid-19? It looks like even when we have a cure for this virus, the legal battles will only increase.  Even after a vaccine is developed, the challenges will include making it available to the general public at an affordable price. In order to achieve this goal, it will be imperative for the government to consider using the powers conferred on it by Sections 84 and  92 of the Indian Patents Act, 1970.

Compulsory Licensing under The Indian Patents Act, 1970.

In India, there are two types of licenses – Voluntary Licenses and Compulsory Licenses. Voluntary licenses are licenses that the patent owner will voluntarily grant after charging license fees. Compulsory Licensing, in simple words, means permissions for using, making, or selling a patented product without any permission from the patent owner. Under Section 84 of the Indian Patents Act, 1970, the Controller for grant of Compulsory License can authorize a patented invention to be manufactured by a third party on the grounds that (a) the public requirement is not met, (b) the patented invention is not affordable and (c)  that the patented invention is not worked in India. Further, Section 92 of the said act gives the power to the central government to issue a compulsory license at any time after the sealing in cases of extreme urgency. Section 92 (3) of the said Act further clarifies that public health emergencies can also be a ground to issue a compulsory license. In case a COVID-19 vaccine is developed in India, the Government will have to consider issuing a compulsory license. In order to cater to the needs of 1.3 billion people and that too at an affordable price will be a challenge for the Government but Compulsory Licensing will make things easier. Compulsory Licensing, though a very interesting area of study in Intellectual Property Rights in India, has only been used once in a country as big as India.

India’s first compulsory license

A Hyderabad-based drug manufacturer Natco was issued a compulsory license by the Indian Patent Office to sell Bayer’s Cancer drug in 2012. In the judgment, the Patent Controller opined that Bayer was not able to meet the public requirement hence issuing the compulsory license. In fact, out of the total 8,842 patients, only 2% got hold of this life-saving drug. In return, Natco has to pay 8% of the net sales as royalty to Bayer. Bayer was disappointed in the decision of the Controller to grant a compulsory license for its drug Nexavar. Natco welcomed the decision and said it is one of the important first steps to reduce the cost of drugs in India and to make it easily available to all sections of society. The United States of America also criticized this move by labeling it as an attempt to dilute India’s Intellectual Property regime. Hence, issuing Compulsory Licenses has always been a controversial issue and has not been used after this case.

Covid-19 vaccine and Compulsory Licensing

The Corona Virus outbreak has killed more than 3 lakh people worldwide and has affected millions. The only hope that people have is the vaccine for this deadly virus. India, being one of the biggest pharmaceuticals players in the world, has also pledged its contribution in the vaccine making project and has allotted 100 crores from the PMCares Fund for the same. India has various projects working towards the common goal of developing a COVID-19 vaccine. Bharat Biotech and The Indian Council for Medical Research (ICMR) have joined hands towards the common goal of a vaccine. Pune’s Serum Institute is also a forerunner in the vaccine race and has recently commenced the phase 3 of clinical trials on COVID-19 patients. Serum’s chief has also confirmed that if everything goes right, a vaccine can be developed as early as October 2020.  But, keeping in mind the speed at which the virus is spreading, the vaccine will have to be developed at a never seen before scale. Here is why Compulsory Licensing will have to be considered by the Government. The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) in Article 31 also talks about Compulsory Licensing and mentions that when demand in the domestic market is not met, the government can consider issuing a compulsory license. The COVID-19 outbreak might just be the opportunity for the Government to issue a second compulsory license.

What challenges India might face if it chooses to grant a Compulsory License to the COVID-19 vaccine?

India is a developing nation and by that, we mean that India needs investment from companies. The Prime Minister’s recent call to be ‘vocal for local’ also specifies the same. In a post-corona world, where corporate confidence in China is decreasing, India might provide a viable alternative to the companies dependent on China because of the availability of cheap labour in both countries. Some may argue that if India opts to provide a Compulsory License to the COVID-19 drug, that will tarnish India’s image as a safe haven for patents. Considering this and the fact that this might bring down their profitability, the enterprises might think twice before coming to India because of the weak Intellectual Property regime. But keeping in mind how big a crisis this virus is wrecking in India, these downsides might be overlooked keeping in mind the need of the entire society at large. Hence, the COVID-19 outbreak and the possibility of a vaccine from India might be a game-changer for India’s pharmaceutical industry and Compulsory Licensing might just be the way ahead for us.

This article is authored by Anmol Mahajan, 2nd-year student at Rajiv Gandhi National University of Law, Punjab.

Also Read – Labourers – Once Assets Now Turned Into Liabilities

Law Corner

Leave a Comment