Compulsory Licensing of Patents in India: Section 84 and the Natco v Bayer Precedent

Compulsory licensing is one of the most discussed, and most misunderstood, features of Indian patent law. It allows a third party to apply for a licence to use a patented invention without the patent owner's consent, on defined public-interest grounds. For a patent owner or a licensee weighing exposure in India, the practical point is that the mechanism exists and is real, but the bar to obtain such a licence is high and orders have been granted only rarely. Understanding the grounds, the leading precedent, and the limits of that precedent is more useful than treating the risk as routine.

The statutory basis under section 84

The core provision sits in section 84 of the Patents Act. Broadly, an interested person may apply for a compulsory licence on one or more grounds: that the reasonable requirements of the public with respect to the patented invention have not been satisfied; that the patented invention is not available to the public at a reasonably affordable price; or that the patented invention is not worked in the territory of India. These grounds are alternatives, so any one of them can support an application; a licence does not depend on establishing all three. "Worked in India" has itself been the subject of argument, particularly whether local manufacture is required or whether importation can suffice, and the position is fact-specific rather than settled by a single bright-line rule.

An application of this kind can generally be made only after a period has elapsed following the grant of the patent, and the applicant is normally expected to have first sought a voluntary licence from the patentee on reasonable terms. The exact period and the procedural steps are set by statute and the Patents Rules, and they are the sort of detail that changes, so confirm the current requirements with the Indian IP Office (the CGPDTM) or local counsel rather than relying on a figure quoted in general commentary. India's framework also contains separate, government-initiated provisions for licences in situations of national emergency, extreme urgency, or public non-commercial use, which sit apart from section 84 and operate on a different footing from an ordinary applicant-initiated request.

If a compulsory licence is granted, the patent owner does not lose the patent. The licensee pays a royalty set by the Controller, and the patent continues in force. Official fees apply to the various filings involved; confirm the current amount with the Indian IP Office (the CGPDTM) or local counsel.

Natco v Bayer: the leading and largely singular example

The case that defines the modern debate is Natco Pharma v Bayer, concerning a patented cancer medicine. India's Controller of Patents granted a compulsory licence to Natco, and the decision was affirmed on appeal (by the appellate tribunal and the Bombay High Court, with the Supreme Court declining to intervene rather than ruling on the merits). The Controller found that the three section 84 grounds were engaged on the facts of that case, including that the medicine was not reasonably affordable to the public and was not adequately worked in India, and set a royalty payable to the patent owner. On the working point specifically, the Controller treated the patentee's reliance on importation, rather than local manufacture, as failing the working requirement on those facts.

What matters for risk assessment is not just that Natco succeeded, but how isolated that success has been. Natco v Bayer remains, to date, effectively the only section 84 compulsory licence granted in India; later applications have generally not succeeded, and the decision has not opened the door to a stream of routine grants. Because a position like this can move if a further licence issues, confirm the current picture with the Indian IP Office (the CGPDTM) or local counsel. It is best read as a high-profile, fact-heavy outcome in the pharmaceutical context, not as a template that applies easily across industries.

Why compulsory licences remain rare and exceptional

Several factors keep these orders exceptional. The applicant carries the burden of establishing the statutory grounds on the evidence, the patentee has a full opportunity to answer, and the decision turns closely on pricing, supply, and working data specific to the invention and the market. The Natco facts, an expensive medicine with a strong public-health dimension and contested local availability, were unusually favourable to an applicant. Most patents will not present that combination.

For a patent owner, sensible mitigation is straightforward in principle: maintain a credible plan for making the invention available in India on reasonable terms, keep evidence of working or of good-faith commercial supply, and engage constructively if approached for a voluntary licence. For a prospective licensee, section 84 is a route of last resort with a demanding evidential threshold, not a shortcut around ordinary negotiation. You can see how patents fit alongside the other rights and enforcement questions in our India patents overview.

Getting specific advice

IPEnvoy is not a law firm and does not provide legal advice; this is general information. Compulsory licensing turns on the precise statutory wording, the current rules and timelines, and the facts of your patent and market, all of which can change. Confirm the current position with the Indian IP Office (the CGPDTM) and a qualified local IP professional before acting. If it would help, IPEnvoy can introduce you to vetted IP specialists in India who handle patent working requirements, voluntary licensing, and compulsory-licence exposure, so you can assess your position with someone qualified on the ground.