Patents, compulsory licensing and the common good

The World Intellectual Property Organisation (WIPO) celebrates Intellectual Property Day on April 26 to display the strength of innovation in transforming the world. This year, IP Day is anchored on the idea of ‘Building our Common Future with Innovation and Creativity’.

The WIPO has made a call to innovators and inventors to connect IP to Sustainable Development Goals to make the world a better place to live. The 17 Goals guide the nations to channelise resources - including technological and intellectual - to achieve a quality of life, peace and prosperity for individuals. In view of the theme of IP Day, a discussion on the nature of property over patents and the usage of the same for the common good is undertaken in this academic endeavour.

With reference to the ongoing constitutional issue on the significance of ‘material resources’ in the context of private property in Property Owners Association v. State of Maharashtra, the write-up examines an analogy between the nature of compulsory licensing and the common good by contextualising the nature of patent rights. Do patents assume the character of material resources of the community or do they remain privately owned property? Do the provisions related to compulsory licensing indicate the communitarian character of the property having a limited right to the patent holder?

Patent as a material resource of the community

A patent is a statutory right guaranteed to the inventor for novel and efficacious inventions. It is granted for an advanced and purposeful invention. The ‘right to exclude’ others from making, using, selling, or importing a patented product in India is the core of the legal right guaranteed to the patent holder. The exclusive nature of the right conveys the materialistic attributes of the invention as the beneficiaries of the patent are the members of society. Every patent is a creation based upon the previous knowledge developed by others. Possibly, because of this reason, the statutory limitation of ownership rejects the perpetual terms over the patent. Others are allowed to utilise the invention on the terms and conditions determined by the patentee.

Besides general conditionality, the patentee commercialises the invention to recover the investment and generate a corpus for future innovations. The disclosure of the invention by the patentee in lieu of the exclusive right underscores the idea of the greater utility of such a patent in societal interest. The strength of an invention lies in its potential practical use instead of stimulating a research agenda.  The value of patent intrinsically connects with the socio-economic value of the invention in the form of greater of utility to customers.

Considering the socio-economic value of a patent, the exclusivity of the rights is coupled with the exceptions leading to the availability of the inventions without the consent of the patentee. The provisions related to compulsory licensing acknowledge the ‘materialistic’ value of the invention by authorising the government to ensure the working of the patent.

Compulsory license as a common good

Considering the socio-economic value of the invention, the ownership over the patent requires to be given a restricted meaning. The provisions on compulsory license fortify the absence of absolute ownership and unilateral grant of the license by the government. The rationale for granting compulsory licenses is to outweigh the public welfare over the patentee’s monopoly. The Controller of Patents can issue the compulsory license after three years of the issuance of the patent on the ground that reasonable requirements of the public have not been satisfied, the patented invention is not available to the public at a reasonable price, or the patented invention is not worked in India. Additionally, the government may issue the license on the grounds of national emergency or in circumstances of extreme urgency, or in case of public non-commercial use.

A closer analysis of the grounds connected with the idea of the common good, as enshrined under Article 39(b) of the Constitution, surely unravels the vital design of the patent regime.

Despite having elaborate statutory provisions to grant the license without the patentee’s permission to a party in exchange of royalty, the issuance of such license is very abysmal. Pertinently, only one compulsory license has been granted in India to date. The compulsory license in this case was granted to a Hyderabad-based generic drug manufacturing company Natco Pharma, for the generic production of Bayer Corporation’s Nexavar, which is a life-saving medicine, and is related to the treatment of cancer. Needless to emphasise, the grant of compulsory license will make the drugs and medicine accessible and affordable. Compulsory licensing in the drugs and pharmaceutical industry ensures access to essential medicines during emergencies and promotes competition by allowing generic production of patented drugs. The ‘out-of-pocket expenditure’ in total health care is 47.1%. This clearly reflects the insurmountable hardship that the households endure when they seek medical assistance. The corporatisation of health care advances the personal interest of the inventor at the cost of social value attached to the invention.

Conclusion

Article 39(b) of the Constitution legitimises the invocation of a compulsory license in the interest of the larger public good. The awful rate of grant of the compulsory licenses raises a question on the workability of the patent. Therefore, it makes sense to claim that the constitutional mandate should guide the Controller and the government when it comes to introducing equilibrium between public interests and ownership. The constitutional goal is to ensure the distribution of resources to the community to attain a decent living for everyone, given that a decent living is under threat due to non-availability of life-saving drugs. Thus far, only one compulsory incense has been granted and such an insignificant grant is a clear testimony of giving precedence to private rights over the common good. The ongoing litigation on the interpretation of Article 39(b) may serve as a guide to give effective realization of public need as envisaged in the scheme of patent law. Patent law is a significant enabler in fulfilling the SDGs provided the law is given effect in a holistic sense without undue importance to developed and developing economies in the matter of granting compulsory licenses.

Uday Shankar is an Associate Professor at Rajiv Gandhi School of Intellectual Property Law at Indian Institute of Technology, Kharagpur.