Navigating the Limitations on Patent Rights: What Patentees Can and Cannot Do

A patent gives its holder an exclusive right to exploit an invention – to make it, use it, sell it, and import it – for a period of 20 years. That sounds like an absolute monopoly. But it isn’t. Under the Patents Act, 1970, that monopoly comes with built-in limits. These limits exist not to punish inventors, but to ensure that the power of a patent does not come at the cost of scientific progress, public health, or international trade obligations. Understanding where patent rights end is just as important as knowing where they begin.

Why patent rights are not absolute 🔗

The law grants a patent as a bargain: the inventor gets a temporary monopoly, and in return, society gets full disclosure of the invention, and eventually, open access to it. But during those 20 years, unchecked exclusivity can block scientific research, harm public health, or raise geopolitical complications. To address this, the Patents Act, 1970 lays down specific exemptions – situations in which using a patented invention does not amount to infringement, regardless of what the patent holder may prefer. These limitations are not loopholes; they are deliberate policy choices embedded in the statute.

Section 47: the most important limitation on patent rights 🔗

Section 47 of the Patents Act is the central provision dealing with limitations on patent rights. It makes the grant of every patent subject to certain automatic conditions. These conditions apply without any separate order or notification – they are built into every patent the moment it is granted.

Government use of patented inventions 🔗

Sections 47(1) and 47(2) allow the government to import, make, or have made on its behalf any patented product or product made by a patented process, but only for its own use. The key phrase here is “merely for its own use” – the government cannot use this provision to make patented products available to the general market. Further, Section 47(4) allows the government to make, use, or import any medicine, drug, or medical equipment for distribution through government-run or government-notified public health centres.

Importantly, no royalty or remuneration is payable to the patentee when the government uses the invention for a sovereign purpose. This was clarified by the Bombay High Court in Garware Wall Ropes Ltd. v. A.I. Chopra and Konkan Railway Corp. Ltd., where the court held that the Section 47 government exemption applies only to government departments and their servants or agents – not to independent third parties acting on a commercial contract. A third party wishing to use a patented invention on behalf of the government must instead proceed under Section 100, which requires payment of royalty.

A different but complementary view emerged in Chemtura Corporation v. Union of India, where the Delhi High Court held that a consortium of third parties that strictly followed the technical drawings and instructions of the Railway Ministry – exercising no independent judgment over the product – could also be covered under the Section 47 government exemption. The distinguishing factor was the absence of autonomy: the third party was essentially acting as an extension of the government’s hand.

Research and experimental use 🔗

Section 47(3) carves out another significant exemption. It permits any person to make or use a patented product or process for the purpose of experiment or research, including the imparting of instructions to pupils. This means a university laboratory can use a patented chemical process to teach students, or a research institution can experiment with a patented compound to study its properties – without seeking the patent holder’s permission.

The scope of this exemption has not yet been fully tested in Indian courts, but the provision is deliberately broad. India’s response to WIPO on exceptions and limitations confirms there is no restriction on the scope or extent of research and experimentation under this section, and that the exemption equally covers teaching activities in an academic setting. This prevents patents from becoming a barrier to scientific knowledge.

Section 49: foreign vessels, aircraft, and land vehicles 🔗

Section 49 addresses a practical problem in international trade and travel. When a foreign ship docks temporarily at an Indian port, or a foreign aircraft lands at an Indian airport, there is a realistic chance that components of that vessel – its engines, machinery, navigation systems, or other accessories – may incorporate inventions that are patented in India. Should the foreign vessel owner be liable for patent infringement simply because of a temporary entry into Indian territory? The answer, under Section 49, is no.

Section 49 provides that patent rights are not infringed when the patented invention is used in the body, engines, tackle, or accessories of a foreign vessel, aircraft, or land vehicle that enters India temporarily or accidentally – whether intentionally calling at a port or entering waters by chance. The term “temporarily” covers both unintentional entries and regular, scheduled port calls, as long as the vessel does not remain in India permanently.

Three conditions must be met for this exemption to apply. First, the foreign vessel, aircraft, or vehicle must only be temporarily in India. Second, the use of the patented invention must be for the actual needs of the vessel, aircraft, or vehicle – not for manufacturing goods to be sold in India. Third, and crucially, this exemption operates on a reciprocity basis: it does not apply to vessels or aircraft from countries whose laws do not grant corresponding protections to Indian-registered vessels when they visit that country’s ports or territorial waters.

This provision directly reflects India’s obligations under Article 5ter of the Paris Convention, which requires member countries not to treat the use of a patented invention on foreign vessels as infringement when such entry is temporary and the use is solely for the vessel’s needs. India, as a Paris Convention signatory, incorporated this obligation into Section 49.

Section 107A: the Bolar exemption and parallel imports 🔗

Introduced through the Patents Amendment Act, 2005, Section 107A is one of the most consequential limitations on patent rights, particularly in the pharmaceutical sector. It has two distinct parts.

The Bolar provision – Section 107A(a) 🔗

Under Section 107A(a), any act of making, constructing, using, selling, or importing a patented invention is not considered infringement if it is done solely for uses reasonably related to the development and submission of information required under any law – whether in India or in another country – that regulates the manufacture, use, or sale of a product. In plain terms: a generic drug manufacturer can legally work with a patented pharmaceutical compound before the patent expires, if the purpose is to gather the data required for regulatory approval.

The policy rationale is straightforward. Obtaining regulatory approval for a new drug is a lengthy process that can take years. If generic manufacturers had to wait until the day a patent expired before they could even begin clinical trials and regulatory filings, the patent holder’s effective monopoly would extend well beyond the statutory 20-year term. The Bolar provision prevents this by allowing the necessary preparatory work to happen while the patent is still valid, so that affordable generic versions can enter the market the moment the patent lapses.

The Delhi High Court gave this provision significant breadth in Bayer Corporation v. Union of India (Natco). Bayer held an Indian patent for Sorafenib, the active ingredient in its cancer drug Nexavar, and sought to restrain Natco Pharma from exporting a quantity of the compound to a Chinese company for research purposes. The Division Bench held that Section 107A covers exports of a patented invention – not just use within India – as long as the purpose is research or regulatory submission. The quantity involved was only enough for a single trial batch, confirming it was not for commercial sale. The court observed that the Bolar exemption is designed to ensure that patent exclusivity does not extend beyond the guaranteed term, and that the public ultimately gets access to the technology it was promised when the patent was granted.

Parallel imports – Section 107A(b) 🔗

The second part of Section 107A allows the importation of a patented product by any person from a party who is authorised under the law of that country to produce and sell the product. This is India’s statutory endorsement of parallel imports – a concept rooted in the principle of international exhaustion of patent rights. Once a patent holder has authorised the sale of a product in any country, they cannot use their Indian patent to block its importation into India. This keeps prices competitive and prevents patent holders from artificially segmenting markets by territory.

Compulsory licensing: limiting the monopoly in the public interest 🔗

Beyond the specific exemptions discussed above, the Patents Act imposes a structural limitation on patent rights through compulsory licensing under Chapter XVI (Sections 82 to 94). A compulsory licence can be granted by the Controller of Patents to a third party if, after three years from the grant of a patent, the patented invention is not available to the public at a reasonably affordable price, is not being worked in India to an adequate extent, or is not meeting the reasonable requirements of the public.

The most well-known application of compulsory licensing in India occurred in 2012, when the Controller of Patents granted Natco Pharma a compulsory licence to manufacture Sorafenib – Bayer’s cancer drug Nexavar – at a fraction of the original price. The drug was priced at approximately ₹2.8 lakh per month by Bayer; Natco could manufacture and sell it at around ₹8,800 per month. The Controller held that the drug was not available at a reasonably affordable price and was not being worked sufficiently in India. This remains the first and most cited compulsory licence granted in India under Section 84.

In situations of national emergency or extreme urgency – such as a public health crisis – the Central Government can also issue a notification under Section 92, after which any interested person may apply for a compulsory licence without following the full standard procedure. This is a faster route available precisely when normal channels are too slow.

Revocation for non-working: Section 85 🔗

Another limitation operates as a use-it-or-lose-it mechanism. Under Section 85, if a patented invention is not being worked in India even after a compulsory licence has been granted, the Controller may revoke the patent entirely. The purpose is to prevent a patent holder from sitting on a patent purely to block others, without making any genuine attempt to exploit it or make it available. This revocation power reinforces the law’s position that a patent is not simply an asset to be hoarded – it comes with an obligation to work the invention for the benefit of society.

The balance the law is trying to strike 🔗

Each of these limitations – government use, research exemptions, the foreign vessel exception, the Bolar provision, parallel imports, compulsory licensing, and revocation for non-working – reflects a deliberate policy choice. Patent law in India does not treat the patentee’s monopoly as a standalone right that trumps all other considerations. It treats it as a conditional grant: you receive exclusive rights in exchange for disclosure and the expectation that the invention will be put to productive use. Where that bargain breaks down – where the monopoly begins to obstruct science, harm public health, or persist without any corresponding benefit to society – the law steps in with corrections.

This design is not unique to India; it mirrors the flexibility that Article 30 of the TRIPS Agreement expressly reserves for member countries: the right to create limited exceptions to patent exclusivity, provided those exceptions do not unreasonably conflict with normal exploitation of the patent and do not unreasonably prejudice the patentee’s legitimate interests. India has used this flexibility purposefully, particularly in the pharmaceutical sector, where the stakes for public access are highest.

What do you think? If a patented life-saving drug is technically available in India but priced beyond the reach of most patients, should the government be quicker to invoke compulsory licensing – or does that risk discouraging the very research investment that produces such drugs in the first place? And given that the research exemption under Section 47(3) has never been fully tested in an Indian court, how should the judiciary define its outer limits when that case eventually arrives?

References

1. https://www.indiacode.nic.in/handle/123456789/1392?locale=en
2. https://www.intepat.com/blog/section-47-of-the-indian-patents-act
3. https://www.wipo.int/documents/d/scp/docs-en-exceptions-replies-india_2.pdf
4. https://www.mondaq.com/india/patent/700958/patent-does-not-confer-absolute-monopoly
5. https://www.mondaq.com/india/patent/325620/exceptions-limitations-to-patent-rights-in-india
6. https://sagaciousresearch.com/blog/indian-patent-law-understanding-the-patent-rights-obligations
7. https://www.khaitanco.com/thought-leadership/bolar-provision-a-meticulous-exception
8. https://www.mondaq.com/india/patent/581100/bolar-exemption-in-indian-patent-law-is-section-107aa-an-exception-or-an-enabling-provision