Navigating the Limitations on Patent Rights for Public Good

A patent gives its holder something powerful: the legal right to exclude everyone else from making, using, selling, or importing their invention for 20 years. That exclusivity is the engine of innovation – it rewards inventors for the time, money, and risk they invest. But what happens when that monopoly starts working against the very public it was meant to serve? What if a life-saving drug is patented but priced beyond the reach of most Indians, or a technology critical to national security is locked behind a private licence? This is where limitations on patent rights come in – carefully designed legal mechanisms that prevent the patent system from becoming a tool of abuse while preserving its core incentive structure.

Why patent rights cannot be absolute 🔗

Patent law operates on a bargain: society grants an inventor a temporary monopoly in exchange for the inventor disclosing the invention to the public. Once the patent term expires, the invention enters the public domain and anyone can use it freely. But the law recognises that waiting 20 years is not always acceptable – especially in matters of public health, national security, or essential technology access. India’s Patents Act, 1970 therefore builds in specific constraints on patent rights from the outset. These are not penalties imposed on inventors; they are structural features of the patent system that align private rights with broader societal interests.

Compulsory licensing: the most significant check on patent monopoly 🔗

Compulsory licensing is the most prominent limitation on patent rights and the one that generates the most debate. As defined by the European IP Helpdesk, it is an authorisation granted by the government to a third party to produce a patented product without the consent of the patent owner – specifically when the owner has been taking undue advantage of the exclusive rights the patent confers.

The legal framework under the Patents Act, 1970 🔗

Under Chapter XVI of the Patents Act, 1970, any interested person can apply to the Controller General of Patents for a compulsory licence after three years have elapsed from the date the patent was granted. The application succeeds if any one of the following grounds under Section 84(1) is established: the reasonable requirements of the public with respect to the patented invention have not been met; the patented invention is not available to the public at a reasonably affordable price; or the invention is not being worked in India on a commercial scale. The Controller also considers factors such as the nature of the invention, the applicant’s capacity to work it, and the efforts made to obtain a voluntary licence from the patentee.

Beyond individual applications, Section 92 of the Act allows the Central Government to issue compulsory licences on its own initiative – without waiting for any individual applicant – in circumstances of national emergency, extreme urgency, or for public non-commercial use. And under Section 92-A, inserted after the Doha negotiations, compulsory licences can be granted specifically to manufacture and export patented pharmaceutical products to countries that lack manufacturing capacity to address their own public health crises.

The landmark Natco v. Bayer case 🔗

India’s first – and so far only – compulsory licence was granted on 9 March 2012, when the Patent Office authorised Natco Pharma to manufacture a generic version of Bayer AG’s patented cancer drug sorafenib tosylate (sold as Nexavar). The drug treated kidney and liver cancer but was priced at approximately ₹2.8 lakh per month – well beyond the reach of most Indian patients. Natco had first sought a voluntary licence from Bayer and been refused. The Controller granted the compulsory licence under Section 84, and the decision was ultimately upheld by the Bombay High Court. This case remains the defining precedent for how Indian courts approach the intersection of patent rights and public health access.

Conditions that must be met 🔗

A compulsory licence is never a free pass. Even when granted, the original patent holder retains ownership of the patent and, crucially, the right to receive adequate remuneration. The TRIPS Agreement – the international treaty that governs intellectual property standards among WTO members – sets minimum conditions: the proposed licensee must first attempt to obtain a voluntary licence on reasonable commercial terms; if granted, the licence must be non-exclusive and non-assignable; and it must be used predominantly for domestic supply (with exceptions for export under Article 31bis). The Doha Declaration of 2001 reinforced that public health crises – including epidemics like HIV/AIDS, tuberculosis, and malaria – can constitute the “national emergency” or “extreme urgency” that allows these conditions to be relaxed.

Government use provisions 🔗

Distinct from compulsory licensing, the Patents Act also allows the government to use patented inventions directly – without going through the Controller’s adjudicatory process – under Sections 47 and 100.

Section 47: automatic exemptions for government and research 🔗

Section 47 provides that every patent granted in India is subject to certain built-in conditions. The government can make, use, or import a patented invention for its own purposes without triggering infringement liability – and without paying royalty when the invention was developed independently of the patentee. The section also carves out a research and experimentation exemption: any person can use a patented invention for experimental or research purposes, including for imparting instructions in educational institutions. The key qualifier, however, is the word “merely” – the use must be purely for research or experimentation, with no commercial dimension.

Section 100: broader powers for government use 🔗

Section 100 grants the Central Government wider authority than Section 47. Under this provision, the government or any person it authorises in writing can use a patented invention for government purposes at any time – before or after the patent is granted. Unlike Section 47, this section does require the government to pay adequate remuneration to the patentee, determined either by mutual agreement or by the High Court if the parties cannot agree. The section specifically covers circumstances of national emergency, extreme urgency, and public non-commercial use, making it a critical tool in public health crises. Separately, Section 102 allows the Central Government to acquire a patent outright if public welfare demands it, with compensation paid to the patent holder.

The Bolar provision: enabling faster access to generic medicines 🔗

One limitation that directly affects the pharmaceutical industry is the Bolar exemption, codified in Section 107A(a) of the Patents Act. It provides that any act of making, using, or importing a patented invention solely for purposes reasonably related to obtaining regulatory approval – such as submitting data to the Drug Controller General of India – does not constitute patent infringement. The practical effect is significant: generic drug manufacturers can begin developing and testing their products while the original patent is still in force, so that an affordable generic version can enter the market the moment the patent expires. Without this provision, the effective period of exclusivity would extend well beyond the legal 20-year term, because no generic alternative would be ready to launch immediately.

Non-patentable subject matter as a limitation 🔗

Patent rights can only be limited once they exist – but the law also prevents certain types of subject matter from becoming patents in the first place. Section 3 of the Patents Act lists a range of non-patentable inventions, including discoveries of naturally occurring substances, mere discoveries of new forms of known substances that do not enhance efficacy (the so-called Section 3(d) bar), methods of agriculture or horticulture, and inventions whose primary use is contrary to public order or morality. Traditional knowledge is also excluded. These exclusions serve a preventive function: they stop the patent system from being used to monopolise knowledge that belongs to the commons or to extend the life of a patent through incremental, non-innovative changes.

Revocation of patents in the public interest 🔗

Even a validly granted patent can be revoked if it begins to work against the public interest. Section 66 of the Patents Act empowers the Central Government to revoke a patent by notification if it is satisfied that the patent or the manner in which it is being exercised is mischievous to the state or prejudicial to the public. This is a high threshold, but it exists as a backstop for situations where compulsory licensing alone is insufficient – for instance, where the very existence of the patent, rather than just its pricing or non-working, causes public harm.

The international framework: TRIPS and the Doha Declaration 🔗

India’s domestic limitations on patent rights do not exist in isolation. They operate within the framework of the TRIPS Agreement, which sets the minimum standards of intellectual property protection that all WTO members must maintain. For a long time, there was uncertainty about how much flexibility developing countries actually had to depart from full patent enforcement in the public interest. The 2001 Doha Declaration on TRIPS and Public Health settled this question: it affirmed unambiguously that the TRIPS Agreement does not and should not prevent member governments from taking measures to protect public health, and that each member is free to determine the grounds on which compulsory licences are granted. Public health crises – including long-running epidemics – qualify as circumstances of national emergency.

The Doha Declaration also addressed a gap in Article 31(f) of TRIPS, which restricted compulsory licence production to predominantly domestic supply. Many countries with no pharmaceutical manufacturing capacity had no way to benefit from compulsory licensing at all. The Declaration’s Paragraph 6 system – eventually formalised as Article 31bis of the TRIPS Agreement, which entered into force in 2017 – created a special export-oriented compulsory licence mechanism. India implemented this through Section 92-A of its Patents Act, making it possible for Indian generic manufacturers to produce and export patented drugs to countries that lack the capacity to manufacture them domestically.

Balancing innovation and access: the ongoing tension 🔗

Critics of limitations on patent rights argue that weakening exclusivity deters pharmaceutical research and development – that if companies cannot recover their investment through patent-protected pricing, they will stop developing new drugs. Proponents counter that the current system allows pharmaceutical companies to set prices that place medicines beyond the reach of billions of people, and that the public subsidises much of the underlying basic research anyway. Indian scholarship has also pointed out a paradox: despite having comprehensive compulsory licensing provisions on the books, India has granted only a single compulsory licence in its entire modern patent history – suggesting that the mechanism, while vital as a deterrent, is rarely operationalised. During the COVID-19 pandemic, for instance, compulsory licensing of vaccines was never formally invoked, raising questions about whether the legal framework is being used to its full potential.

The judicial approach has consistently tried to hold the middle ground. Indian courts have held that compulsory licensing provisions exist for public welfare, but cannot be misused to simply extinguish a patent holder’s commercial rights. There must be a demonstrable failure – of availability, affordability, or local working – before the state intervenes. The patent holder, even after a compulsory licence is granted, retains the patent and the right to adequate remuneration for every copy produced under the licence.

What do you think? Given that India has granted only one compulsory licence in its entire patent history, do you think the existing legal provisions go far enough in making essential medicines accessible – or are there structural barriers preventing these tools from being used effectively? And how should the law respond when a patent holder prices a life-saving drug beyond what the majority of the population can afford: should intervention be automatic, or should it remain a last resort?

References

1. https://thelegalschool.in/blog/rights-limitations-of-patent-law
2. https://intellectual-property-helpdesk.ec.europa.eu/news-events/news/compulsory-licensing-india-and-changes-brought-it-trips-agreement-2021-10-12_en
3. https://legalblogs.wolterskluwer.com/patent-blog/compulsory-license-india/
4. https://www.mondaq.com/india/patent/772644/compulsory-licensing-in-india
5. https://www.nlunagpur.ac.in/PDF/Publications/5-Current-Issue/1.%20COMPULSORY%20LICENSING%20OF%20PHARMACEUTICAL%20PATENTS%20IN%20INDIA.pdf
6. https://www.wto.org/english/tratop_e/trips_e/pharmpatent_e.htm
7. https://www.intepat.com/blog/section-47-of-the-indian-patents-act
8. https://thelawcodes.com/article/use-of-inventions-for-purposes-of-government-and-acquisition-of-inventions-by-central-government/
9. https://www.wto.org/english/tratop_e/trips_e/healthdeclexpln_e.htm
10. https://www.wto.org/english/thewto_e/minist_e/min01_e/mindecl_trips_e.htm
11. https://pmc.ncbi.nlm.nih.gov/articles/PMC10726804/
12. https://or.niscpr.res.in/index.php/JIPR/article/view/602