Compulsory Licensing of Patents- A Comparative Analysis of Japanese and Indian Practices (*)
Invited Researcher: V.C. VIVEKANANDAN (**)
The TRIPS agreement has brought a basic universal common denominator on various Intellectual Property segments
among the member states of World Trade Organization. Yet in practice there are considerable differences among the Nation
States and standpoints between Developed Nations and rest of the world. One of the issues is that of award of compulsory
licenses and its impact on patent system. In Asian context, Japan and India both have compulsory licensing provisions based on
public interest in their respective statutes. India awarded the first compulsory license in 2012 in the field of drugs and it had awidespread support for CL among civil society groups and academia in India to use CL as an effective tool to counter the issueof prices and access to its population. In contrast Japan has not so far issued and has its interpretation for a pro-patent regime
reflected in its 2013 “Japan Revitalization Strategy” and the Japanese Cabinet approved the “Basic Policy ConcerningIntellectual Property Policy” where the emphasis is on global acquisition and effective use of IPR. This research aims to study
the divergent approaches towards Compulsory licenses of these two Asian countries- and to disseminate the reasons and logic ofsuch approaches.

IIntroduction

The evolution of Intellectual Property (IP) in different
parts of the world in the last three centuries had its foundation
based on diverse theoretical justifications. If one has tocondense them to few broad aspects which has led tolegislative efforts it can be listed as: a. to provide incentive tothe creator/inventor for disclosure to the public b. to have alimited monopoly to recoup the investments in such efforts c.
to allow the same to enter the public domain after a period ofmonopoly and d. to provide legal channels to challenge andovercome abuses using such monopoly and finally e. theright of the government to intervene to manage such rights
for public interest. In modern times the Intellectual Property
System has evolved as a complex regime where investments
and trade has a huge stake as Institutional (public and private)players embark on research &development in case of
inventions and technological platform based disseminationand distribution in case of other creative industries.
The research undertaken by the scholar would like tofocus on the patent system among the other forms ofIntellectual properties and specially that of the interface ofpatents and health to deal with concept and practice of‘Compulsory License’ (CL) and its appropriate justificationsin the landscape of the patent system. This paper proposes tolook key issues of the public interest foundation of the patent
system, the conditions for monopoly grants, abuse ofmonopolies, issues of access, legislative and judicial
interventions based on public interest. This paper will analyze

the comparative policy and practice of India and Japan interms of the legal framework of compulsory licensing
mechanism and how in practice it has shaped in the recenttimes.
Indian Patent Act of 1970 under section 841 deals withcompulsory licensing whereas the Japanese Patent Act of1959 under article 93 2 under the (Award granting nonexclusive license for public interest). A comparative analysis
throws the convergence in legislative provisions and yet
divergence in practice which has various factors of thebusiness aspects and socio-economic factors which forms theanalysis and conclusion of this research paper.

IIPatents and Public Interest

The theoretical foundations for Intellectual Property
laws are found in various loosely defined legal doctrines
enunciated by scholars from the fields of law, economics andmanagement. Such foundations are often grouped broad
approaches of that of Natural Rights, Utilitarian, Person hoodtheories. The Natural Rights perspective of Locke3 Utilitarianconcept espoused by Jeremy Bentham4 justified monopolies
to encourage innovations aimed at benefit to the larger society
revolves around two premises – firstly, the justification ofmonopolies to result in creating an ecosystem of innovations
and creations and secondly such instruments are tools tobenefit the public at large.
In United Kingdom in the year 1449 the grant of a(*) This is a summary of the report published under the 2014FY Industrial Property Research Promotion Project (2014FY-2016FY) Entrusted by theJapan Patent Office.
(**) MHRD IP Chair Professor, Nalsar University of Law, Hyderabad, at our institute over a period of approximately 2 months from September 30, 2015
through November 28, 2015, as an Invited Researcher for the Fiscal Year 2015.
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1 ●patent invention to John of Utynam with a monopoly for aperiod of 20 years for a glass making is quoted by various
sources5. The later monopolies granted by the crown resulted
in wide spread crisis and this resulted in the enactment of the1624 Statute of Monopolies in UK. The French Patent Act in
1791- later amended in 1800 and 1844 matched thedevelopments in the United Kingdom. A notable exclusionfrom patents was that of Medicines during that period. The
German efforts started in the enactment of the Unified
National Patent Act of 1877. Further legislations enacted
undertook to revoke non-working patents after three years
and the provision to revoke it is against that of public interest
including the provision of compulsory licenses. United States
passed its first Patent Act in 1790. However From its earlylegislation United States had the philosophy of compulsory
licenses as an impediment to that of the innovation and equatedindividual efforts to innovation and protection as a social
welfare principle. Japan passed the Patent Act of 1921 had thefeatures of state compensation to revoke patents in public
interest and at that point excluded Medicines, food andchemical product patents and allowed only processes, whichchanged with later developments in other nations. The later day
entrants like India, China and other countries in Asia, Africa,Latin America and Canada have introduced intervention
instruments in their Act on the issue of public interest. However
the grounds and practice have variations by countries. Thevariations include public interest, non-use of patented
inventions, national emergencies and insufficient capacity towork the patent. The issue of linking compulsory licenses is not
explicit in many national IP regimes but has the potential to beinterpreted.
The WIPO study in 2011 on legislative aspects relating
to Compulsory Licenses interfacing anti-competitive
practices revealed the divergent positions of the approaches toCompulsory License especially that of European Union (EU)and Untied States (US) the two dominant players in the spaceof Patents among the 38 respondents. The EU positionindicated that the rights of the IP could be granted under thecompetition law, which is akin to that of the compulsory
license if there an abuse of a dominant player is proved underthe relevant laws under the ‘Essential Facilities Doctrine’6
where as the United States took the interpretation that thecompetition law has no link with compulsory license andsought to address the issue of anti-competition by otheroutcomes such as voluntary license, injunction, civil
penalties, relief by a federal court, cease and desist order andconsumer redress by the approach of ‘Rule of Reason’7.

III International
Perspectives
limitations on Patent RightsofThe evolution of Patent system among various Nation
States also had parallel efforts in the realm of International
Law. Starting with Paris Convention to that of the World●Trade Organization (WTO) led Trade Related Intellectual
Property Rights (TRIPS) agreement, the attempts toharmonize with mutual and minimum standards forprotection of global trade has a modest progress. The analysisof the ‘three instrumentalities’ from the view point of theresearcher are discussed as – Paris Convention andCompulsory License, WTO-TRIPS and Compulsory Licenseand Doha declaration and Compulsory License in thischapter.
Under Paris convention there are two schools ofargument on the interpretation of Article 5 A of Paris
Convention where there is an argument that it does not
explicitly mention about ‘public interest’ and a counter
argument that the Article 5A – paragraph two pointing out thefreedom of the members of the Union to take measures toprevent abuses and failure to work is only one example ofthat.8
The second landmark harmonization effort of Patent
System resulted in the form of TRIPS agreement as part ofthe WTO in 1995. The agreement reiterated the Parisconvention provisions by B. Article 89- The Doha declaration
further reaffirmed and cleared the ambiguities of TRIPS
provision where the provisions of TRIPS were clarified. The
clarification had the following central aspects- a. allowing
compulsory license by governments without the consent of
the patent owner b. the CL to be mainly for the domestic
market and not for export c. need for a negotiation with thepatent owner before award of CL d. adequate compensation
to the right holder in case of CL e. members free to decide thegrounds for CL f. can bypass voluntary license in case of
emergency or extreme urgency g. the patent owner’s right toa legal review of the granted CL h. to allow for making
generic copies for export in case of inadequate capacity by
the desiring member state.

IV Comparative Analysis of Japaneseand Indian Practices
The opening and adopting of the successful strategies of
the European powers and the rising American power led
Japan embrace Intellectual Property models of France andUS as early as 1885 with the enactment of the Statute ofMonopoly Patent. The law as in many other countries went
through changes and resulted in the postwar Patent Law of1959, which came into effect in 1960. The period between
1960-80 was more that of a catch-up game with theinnovations happening in the western countries and appliedsuccessfully into finest manufacturing process in Japan.

The last decade saw a big push of IP in Japan’s
policy arena and has been reiterated in 2013 with the“Japan Revitalization Strategy” and the JapaneseCabinet approved the “Basic Policy ConcerningIntellectual Property Policy”. On the subject ofCompulsory licenses, The Japanese Patent Act of1959 as amended in 1990 under the Chapter IV- 1
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Patent Rights – provision 93 provides for CL where if
there is no agreement reached between the holder andthe seeker of CL the Minister for International Tradeand Industry is entitled for an arbitration decision toaward a CL.
The Japan Patent Office (JPO) in its clause-by-clause
explanation of Industrial Property Law states the officialposition of the implementation of this provision. 10 In thevarious interview conducted by the researcher with Prof.
Shigeo Takakura11 of the law School of Meiji University,Akiko Kato,12 Associate Professor of the Graduate School ofIntellectual Property at Nihon University and Officials of theJapanese Generic Medicines Association (JGMA)13 in Tokyoon the issue of Compulsory licenses it emerged the concept ofpublic interest is interpreted as a stable industrial development
and its facilitation than that of the pricing and affordability
issues. The issues of non-access to be met by other
instrumentalities like universal insurance access rather thanrestricting and removing patent rights. Emphasis was on
negotiated settlement and arbitration methods and only as alast resort the intervention by the Minister is envisaged which
explains the non-issuance of CL in Japan so far.
In comparison an analysis of the Act LXXXII of 1950
in India, amended in 1952, the subsequent Indian Patent Act
1970 and the revised Patent (Amendment) Act of 2005 will
reveal the strong policy perspective of compulsory license in
the Indian patent landscape. This provision specifically waskept to address public health issues as a priority over theconcept that Indian Pharma will come out with new drugs. It
is in 2012 when the first CL was issued by the CG of the
Indian Patent Office (IPO) 14 for NATCO Pharma against
Bayer Corporation the judicial review came into the fore to
test the legal validity of the provisions of section 82 of the
Indian Patent Act. After the refusal of Bayer to negotiate for avoluntary license for its drug ‘Sorafenib’ (CarboxySubstituted Diphenyl Ureas) marketed as Nexavar fortreating advance stage kidney and liver cancer, NATCO
approached the Controller General of Patents in India toaward a CL. The CG awarded the CL based on (a) that thereasonable requirements of the public with respect to thepatented invention have not been satisfied, or (b) that thepatented invention is not available to the public at areasonably affordable price, or (c) that the patented invention
is not worked in the territory of India. The appeals inIntellectual Property Appellate Board, Bombay High Court
and Supreme Court could not get relief for Bayer.

V Conclusion
This research paper aimed at understanding andanalyzing the concept of Compulsory Licensing based on
Public Interest with a special reference to the comparative
analysis of Japanese and Indian law and practices has thrown
a mixed result of ‘convergence and divergence’ on the subject
matter. The position of the International law since Paris
Convention clearly establishes that patent is not an absoluteright in itself but a granted right with the aim of incentivizing
inventions and investment staked in such efforts. Such a rightis an instrument to serve large public interest in various forms
like health, communication, consumer goods, transportationand environmental solutions to list a few. The legal right
granted by the State has the potential to defeat the purpose of
public interest on inadvertent or deliberate commercial
practices. Such an abuse intended or otherwise needs to becorrected by the same legal system, which has empowered it.
This principle has continuously been part of the discourse ofnational and international law making.
However there is a divergence based on historicalexperiences and philosophical foundations. Such divergences
has been the debate and dialogue in International and regionalforums. The researcher wants to use the analogy of ‘Qualia’ acognitive science concept, which is about subjective andconscious experience of how to view an object. In a sense
Public Interest interpreted differently in societies is akin to theconcept of Qualia and there cannot be common meeting
ground. In case of IP and its benefits the proof is in thepudding. The past history has shown that countries havetailored and shaped the IP practice based on theirdevelopment stage. Further when it comes to the issue of
medicines and health care it requires enlarging public interest
from national perspective to that of international perspective.
This is advocated by other bodies like World HealthOrganization and UNHCR to deal issues beyond borders likethe issue of environment. The researcher is of the opinion andconclusion that Patent system world over need to devise aduality of approaches in dealing with health as a fundamental
right and other areas of technology as consumption of choiceand comfort.
1

2

3

Following that case further applications of Compulsory
Licensing by BDR Pharmaceuticals on Dasatinib, a cancer
drug patented by Bristol-Myers Squibb15 and Lee Pharma foranti-diabetes drug saxagliptin branded as Onglyza by Astra
Zeneca 16 in August 2015 were rejected by the Indian PatentOffice.

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http://ipindia.nic.in/IPActs_Rules/updated_Version/sections/ps84.html-visited on 12/15/2015
http://www.japaneselawtranslation.go.jp/law/detail/?id=42&vm=04&re=01&new=1
John Locke, Two Treatises of Government (P. Laslett, ed., Cambridge: C
ambridge University Press, 1970), Second Treatise, Sec. 27.
Bentham, Jeremy (January 2009). An Introduction to the Principles ofMorals and Legislation (Dover Philosophical Classics). Dover Publications Inc. p. 1. ISBN 978-0486454528.
http://ip-science.thomsonreuters.com/support/patents/patinf/patentfaqs/history/
http://www.uh.edu/engines/epi2002.htm
http://www.reuters.com/article/us-moments-patent-idUSKBN0IN1Y

120141104
http://www.wipo.int/edocs/mdocs/mdocs/en/cdip_4/cdip_4_4_rev_st
udy_inf_5.pdf p97 http://www.wipo.int/edocs/mdocs/mdocs/en/cdip_4/cdip_4_4_rev_st
udy_inf_5.pdf -p11
8 G.H.C. Bodenhausen, Guide to the Application of the Paris Conventio
n for the Protection of Industrial Property, as Revised at Stockholm in1967 Geneva: BIRPI, 1968, p. 71. He articulates that ‘The provisions
in paragraph (2) ... do not deal with measures other than those whose
purpose is to prevent the abuses referred .to The member States are th
erefore free to provide analogous or different measures, for example, compulsory licenses on conditions other than those indicated in paragra
ph (4) in other cases where the public interest is deemed to require such measures .This may be the case when patents concern vital interestsof the country in the fields of military security or public health or in the case of so- called “dependent patents’
9 Ibid10 Japan Patent office, Kogyo Shoyuken Ho Chikujo Kaisetu (Clause –by-Clause Explanation of Intellectual Property Law), (Japan Institute ofInvention and Innovation, 16th Edition, 2001) translated by the Institut
e of Intellectual Property o October 9th 201511 Prof. Shigeo Takakura – Professor at the Meiji University was intervie
wed by the researcher on and also submitted his written submission
s on the questions raised by the researcher on CL and its application incontext of Japan
12 Excerpts from Akiko Kato, Associate Professor, Graduate School of I
ntellectual Property, Nihon University was interviewed at IIP office on------ by the researcher
13 The interview at the JGMA office had Takeshi Hishikura, Director, Int
ernational affairs, JGMA, Naoko Iwasaki, Director, IP Dept. Legal &IP of Teva Pharma Japan Inc., Yoshihito Daimon, Patent Attorney, Director, Intellectual Property (Legal)of Mylan Seiyaku Ltd presenting their views.
14 http://www.ipindia.nic.in/iponew/compulsory_license_12032012.pdf
15 http://ipindia.nic.in/iponew/Order_30October2013.pdf
16 http://economictimes.indiatimes.com/industry/healthcare/biotech/pharmaceuticals/india-rejects-compulsory-license-application-of-lee-pharma-against-astrazenecas-saxagliptin/articleshow/50652935.cms
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