⚖ Module 2 - Part 5 of 8

Patent Rights & Limitations

Understand the scope of patent rights under Section 48, term of patent under Section 53, compulsory licensing provisions (Sections 84-92), Government use under Section 100, and exhaustion of rights. Detailed analysis of the landmark Natco v. Bayer case.

Rights of Patentee - Section 48

A patent grants the patentee exclusive rights to exploit the invention commercially. These are negative rights - the right to exclude others from making, using, selling, or importing the patented invention.

Section 48 - Rights of Patentees

Subject to the other provisions of this Act, a patent granted under this Act shall confer upon the patentee:

(a) Where the subject matter of the patent is a product, the exclusive right to prevent third parties, who do not have his consent, from the act of making, using, offering for sale, selling or importing for those purposes that product in India;

(b) Where the subject matter of the patent is a process, the exclusive right to prevent third parties, who do not have his consent, from the act of using that process, and from the act of using, offering for sale, selling or importing for those purposes the product obtained directly by that process in India.

Product Patents vs Process Patents - Rights Compared

Right	Product Patent	Process Patent
Making	Exclusive right to make the product	Exclusive right to use the process
Using	Exclusive right to use the product	Exclusive right to use process product
Selling	Exclusive right to sell the product	Exclusive right to sell process product
Importing	Exclusive right to import the product	Exclusive right to import process product
Scope	Covers product regardless of how made	Only covers product made by that process

💡 Reversal of Burden of Proof

Under Section 104A, in infringement suits for process patents, if the product is new OR if the process is such that the product was made by the patented process, the burden shifts to the defendant to prove they used a different process. This significantly strengthens process patent enforcement.

Term of Patent - Section 53

Section 53 - Term of Patent

(1) Subject to the provisions of this Act, the term of every patent granted after the commencement of the Patents (Amendment) Act, 2002 and the term of every patent which has not expired and has not ceased to have effect on the date of such commencement, under this Act, shall be twenty years from the date of filing of the application for the patent.

Key Aspects of Patent Term

Starting Point: 20 years from filing date (not grant date)
No Extension: Unlike some jurisdictions, India does not provide patent term extension for regulatory delays
Maintenance: Patent continues only if renewal fees are paid annually
Cessation: Patent ceases if renewal fees not paid within prescribed time
Restoration: Lapsed patents may be restored within 18 months if failure was unintentional

💡 Effective Patent Term

Since the 20-year term runs from filing, and prosecution can take 3-5 years, the effective period of exclusivity after grant is typically 15-17 years. For pharmaceuticals, this is further reduced by clinical trial periods before commercial launch.

Compulsory Licensing - Sections 84-92

Compulsory licensing allows the government to authorize third parties to use a patented invention without the patentee's consent, under certain conditions. This is a critical safeguard balancing patent rights with public interest.

Section 84 - Compulsory License on Application

Section 84 - Compulsory Licenses

At any time after the expiration of three years from the date of the grant of a patent, any person interested may make an application to the Controller for grant of compulsory licence on any of the following grounds:

(a) that the reasonable requirements of the public with respect to the patented invention have not been satisfied; or
(b) that the patented invention is not available to the public at a reasonably affordable price; or
(c) that the patented invention is not worked in the territory of India.

Reasonable Requirements of Public (Section 84(7))

Reasonable requirements are deemed not satisfied if:

Existing manufacture is prevented by refusal to license on reasonable terms
Demand is not being met adequately or on reasonable terms
Establishment of industrial activity is prejudiced by import conditions
Export potential is hindered by refusal to license
Development of commercial activities is prejudiced

Section 92 - Special Compulsory License in National Emergency

Section 92 - National Emergency/Extreme Urgency

If the Central Government is satisfied in respect of any patent that it is necessary to make compulsory license available in circumstances of national emergency or circumstances of extreme urgency or in case of public non-commercial use, it may make a notification in the Official Gazette to that effect.

Key differences from Section 84:

No 3-year waiting period required
Government notification triggers availability
Can be invoked for national emergency, extreme urgency, or public non-commercial use
HIV/AIDS, tuberculosis, malaria, and other epidemics explicitly mentioned

Section 92A - Export Compulsory License

Allows compulsory license for manufacture and export of patented pharmaceutical products to countries with insufficient manufacturing capacity, implementing the TRIPS Doha Declaration waiver (Paragraph 6).

Landmark Case: Natco v. Bayer

⚖

Natco Pharma Ltd v. Bayer Corporation

C.L.A. No. 1 of 2011 (First Compulsory License in India)

Background

Bayer held Indian Patent No. 215758 for Sorafenib tosylate (marketed as Nexavar), an anti-cancer drug for kidney and liver cancer. Natco Pharma applied for compulsory license in 2011 - India's first compulsory license application under the 2005 amended Act.

Key Facts

Bayer's Price: Rs. 2,80,000 per month per patient
Natco's Proposed Price: Rs. 8,800 per month per patient
Patients Reached: Bayer supplied only ~200 patients against estimated need of 8,800+ patients
Local Manufacturing: Bayer imported, did not manufacture in India

Controller's Decision (March 2012)

The Controller granted compulsory license finding all three grounds under Section 84 satisfied:

Reasonable Requirements Not Met: Only 2% of potential patients were being reached
Not Reasonably Affordable: Rs. 2.8 lakhs/month was beyond reach of most patients in India
Not Worked in India: Bayer was importing, not manufacturing in India

Terms of License

Royalty: 6% of net sales to Bayer
Natco to supply to at least 600 patients free under patient assistance program
Price cap of Rs. 8,800 per month
License non-assignable and non-exclusive

IPAB Appeal (March 2013)

The Intellectual Property Appellate Board largely upheld the Controller's decision with minor modifications:

Royalty increased from 6% to 7%
Affirmed all three grounds were satisfied
Held that "worked in territory of India" means local manufacturing, not mere import

💡 Significance of Natco v. Bayer

For India: First successful compulsory license; established framework for future applications; affirmed balance between IP rights and public health.

Globally: Demonstrated India's willingness to use TRIPS flexibilities; influenced access to medicines debate worldwide; criticized by pharmaceutical industry as undermining innovation incentives.

Government Use - Section 100

Section 100 - Government Use of Inventions

At any time after an application for a patent has been filed or a patent has been granted, the Central Government and any person authorised in writing by it, may use the invention for the purposes of Government in accordance with the provisions of this Chapter.

Key Aspects of Government Use

Timing: Can be invoked even before patent grant (after filing)
No Prior Negotiation: Unlike Section 84, no need to first negotiate with patentee
Purpose: Limited to "purposes of Government"
Remuneration: Government pays adequate remuneration to patentee
Disputes: Resolved by High Court on appeal

"Purposes of Government" includes:

Maintenance of security of India
Meeting requirements during national emergency
Public health requirements
Food security requirements
Development projects of national importance

Exhaustion of Rights

The doctrine of exhaustion limits a patentee's rights after the first authorized sale of a patented product. Once a product is legitimately sold, the patentee's rights in that particular product are "exhausted."

Types of Exhaustion

Type	Description	Indian Position
National Exhaustion	Rights exhausted only on sale within the country	-
Regional Exhaustion	Rights exhausted on sale within a region (e.g., EU)	-
International Exhaustion	Rights exhausted on sale anywhere in the world	India follows this approach

💡 Parallel Imports

India's adoption of international exhaustion permits parallel imports - products sold legitimately anywhere in the world can be imported into India without infringing the Indian patent. This is particularly significant for pharmaceuticals, enabling access to cheaper versions from other markets.

Section 107A(b) - Parallel Import Protection

Section 107A(b)

For the purposes of this Act, the following acts shall not be considered as infringement:... (b) importation of patented products by any person from a person who is duly authorised under the law to produce and sell or distribute the product.

Part 5 Quiz: Patent Rights & Limitations

Test your understanding of patent rights, compulsory licensing, and related concepts.

Question 1 of 10

Under Section 84, after how many years from grant can an application for compulsory license be made?

A) 1 year
B) 2 years
C) 3 years
D) 5 years

Correct Answer: C

Section 84 provides that an application for compulsory license can be made "at any time after the expiration of three years from the date of grant of a patent" on the specified grounds.

Question 2 of 10

Which of the following is NOT a ground for compulsory license under Section 84?

A) Reasonable requirements of public not satisfied
B) Invention not available at reasonably affordable price
C) Patentee is a foreign entity
D) Invention not worked in India

Correct Answer: C

The nationality of the patentee is not a ground for compulsory license. The three grounds under Section 84 are: reasonable requirements not satisfied, not reasonably affordable, and not worked in India.

Question 3 of 10

In Natco v. Bayer, what royalty rate was finally fixed by IPAB?

A) 5%
B) 6%
C) 7%
D) 10%

Correct Answer: C

The Controller initially fixed royalty at 6%, which was increased by IPAB to 7% on appeal. IPAB held that while 6% was reasonable, a slightly higher rate was appropriate given the nature of the invention.

Question 4 of 10

Section 92 compulsory license can be invoked in which situation?

A) National emergency or extreme urgency
B) After 3 years from grant only
C) Only for export purposes
D) Only with patentee's consent

Correct Answer: A

Section 92 can be invoked in circumstances of national emergency, extreme urgency, or for public non-commercial use, without the 3-year waiting period required under Section 84.

Question 5 of 10

Under Section 100, Government use can be authorized:

A) Only after patent grant
B) Even after mere application filing
C) Only with patentee's consent
D) Only during war time

Correct Answer: B

Section 100 states Government use can be authorized "at any time after an application for a patent has been filed or a patent has been granted" - meaning even pending applications can be subject to Government use.

Question 6 of 10

Which section provides reversal of burden of proof in process patent infringement?

A) Section 48
B) Section 84
C) Section 104A
D) Section 107

Correct Answer: C

Section 104A provides for reversal of burden of proof in suits for process patent infringement. If the product is new or the process is such that the product was made by the patented process, the defendant must prove they used a different process.

Question 7 of 10

India follows which type of exhaustion doctrine?

A) National exhaustion
B) Regional exhaustion
C) International exhaustion
D) No exhaustion

Correct Answer: C

India follows international exhaustion, as reflected in Section 107A(b). This permits parallel imports - products sold legitimately anywhere in the world can be imported into India without patent infringement.

Question 8 of 10

What was Bayer's monthly price for Sorafenib (Nexavar) in the Natco case?

A) Rs. 8,800
B) Rs. 28,000
C) Rs. 2,80,000
D) Rs. 88,000

Correct Answer: C

Bayer was charging approximately Rs. 2,80,000 (Rs. 2.8 lakhs) per month per patient for Nexavar, while Natco proposed Rs. 8,800 - a price reduction of over 97%.

Question 9 of 10

Section 92A provides compulsory license for:

A) Domestic manufacturing only
B) Export of pharmaceutical products to countries with insufficient manufacturing capacity
C) Government use only
D) Research purposes only

Correct Answer: B

Section 92A implements the TRIPS Doha Declaration waiver, allowing compulsory license for manufacture and export of patented pharmaceutical products to countries that lack manufacturing capacity to meet their public health needs.

Question 10 of 10

Under Section 48, patent rights are described as:

A) Exclusive right to prevent others from making, using, selling, importing
B) Positive right to make, use, sell
C) Right to export the product
D) Right to modification of invention

Correct Answer: A

Section 48 grants "exclusive right to prevent third parties" from certain acts - these are negative rights (right to exclude) rather than positive rights. A patent does not grant the right to practice the invention if other laws prohibit it.