Compulsory licensing is a practice critical to patent holders in pharmaceutical industry. And voluntary out-licensing of a new product can be a better option than compulsory licensing to a patent holder. But the revenue stream in a voluntary licensing scenario is likely to be stronger than that in compulsory licensing, according to Dr Malathi Lakshmikumaran, director and head industry practice: IPR, Lakshmikumaran and Sridharan Attorneys.
The strategic advantage is that licensing in India, would also drastically improve odds in an enforcement action against infringers. Both licensee and patentee can show grievance due to infringement. Non-working or insufficient patented inventions may disentitle the patentee from interim injunction in an enforcement action.
“Patentee has the option of choosing licensees of varying capabilities. But there is no such choice in a compulsory license. This is because compulsory license is granted on manufacture of drugs after expiry of three years from grant of patent. Companies can file for compulsory license based on reasonable requirements of the public on a patented invention that is not available to the public at an affordable price,” she pointed out.
In a discussion on Innovation, Protection and Out-licensing organized by the Institute for Drug Delivery and Biomedical Research (IDBR), Bengaluru, Dr Lakshmikumaran highlighted methods to patent and license an invention specific to drug delivery.
“Fields of technology are patentable. But there are non-patentable subject-matters. These are microorganisms, nucleic acid sequences, proteins, enzymes, compounds, etc., which are directly isolated from nature and are not patentable subject-matter. However, processes of isolation of these products can be considered for patent,” she noted.
“Licensing strategies call to refrain from oral communication and mandate written documents which are registered as a formal agreement with the Patent Office. The rights of co-owners consent is mandatory in India. We should also know that patent laws vary from one country to another and worldwide licenses may not work in India,” Dr Lakshmikumaran said.
Over the last five years, India has increased filing across all three major types of IPRs. These cover patent, design and trademark. Patent license can lead to a sustained and independent revenue stream. It provides significant market penetration. Widely licensed technology can increase goodwill in the market. However, a licensor cannot compel or restrict a licensee with regard to purchasing/procuring or using non-patented articles from anyone except the patentee. Now a patentee does not require exclusive grant back from licensee, she said.
Patentees may have capital restrictions to enter manufacturing. There could be geographical limitations to make invention on a commercial scale. There could be policy/legal limitations which may not allow a patentee to enter manufacturing.
Patents are granted so that inventions are worked on a commercial scale to the fullest extent. It will not be granted merely to enjoy monopoly on imports. However patents must enable dissemination of technology to the advantage of manufacturers and the consumers to promote economic welfare. At any cost patents should not be abused to restrain trade or affect international transfer of technology, she pointed out.