Compulsory Licence is an authorisation granted by the Controller of Patents to a person other than the patent holder to make, use, sell, or import the patented invention without the patent holder's consent, on grounds that the patented invention is not available to the public at a reasonably affordable price, or the reasonable requirements of the public have not been satisfied, or the invention is not being worked in India. Under Indian law, compulsory licensing is governed by Sections 84-92 of the Patents Act, 1970.
Legal definition
The Patents Act, 1970 establishes a comprehensive compulsory licensing framework:
Section 84(1): 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 patent on any of the following grounds, namely: (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.
Additional compulsory licensing provisions include:
- Section 92: The Central Government may issue a compulsory licence in circumstances of national emergency, extreme urgency, or public non-commercial use (including for public health crises)
- Section 92A: Compulsory licence for export of patented pharmaceutical products to countries with insufficient manufacturing capacity (the "Paragraph 6" implementation under the Doha Declaration)
The Controller, while granting a compulsory licence, must fix the terms including the royalty payable to the patent holder (which must be "reasonable" having regard to the nature of the invention, expenditure incurred, and the ability of the licensee to work the invention at a reasonable profit).
How courts have interpreted this term
Bayer Corporation v. Natco Pharma Ltd. [Compulsory Licence Application No. 1/2011 (2012)]
India's first and only compulsory licence was granted in this landmark case. The Controller of Patents found that Bayer's anti-cancer drug Sorafenib Tosylate (Nexavar), priced at Rs 2,80,428 per month of therapy, was not available at a reasonably affordable price, the reasonable requirements of the public were not satisfied (only 2% of eligible patients had access), and the invention was not being worked in India (Bayer imported the drug rather than manufacturing it domestically). Natco was licensed to sell the generic version at Rs 8,800 per month — a 97% price reduction. The IPAB and the Bombay High Court upheld the licence, and the Supreme Court dismissed Bayer's Special Leave Petition in 2014.
Novartis AG v. Union of India [(2013) 6 SCC 1]
While not a compulsory licence case, the Supreme Court's interpretation of Section 3(d) complements the compulsory licensing framework by preventing the extension of patent terms through incremental modifications (evergreening). Together, Sections 3(d) and 84-92 form a dual safeguard for public access to affordable medicines.
Lee Pharma Ltd. v. AstraZeneca [CLA No. 1/2015 (Controller of Patents)]
The Controller of Patents rejected Lee Pharma's application for a compulsory licence for Saxagliptin (a diabetes drug), finding that Lee Pharma had not adequately demonstrated that the reasonable requirements of the public were unsatisfied. This decision clarified that the applicant bears the burden of proving each of the grounds under Section 84(1) and that mere availability of cheaper alternatives does not automatically satisfy the conditions for compulsory licensing.
Why this matters
Compulsory licensing is one of India's most significant and internationally debated patent law provisions. It represents the balance that the Indian patent system strikes between incentivising innovation (through patent monopoly) and ensuring public access (through the ability to override that monopoly when the public interest demands it).
For the pharmaceutical industry, compulsory licensing is the most potent tool available under Indian law to address situations where patented medicines are priced beyond the reach of the majority of the Indian population. The Bayer v. Natco decision demonstrated that the provision is not merely theoretical — it can be invoked and enforced, resulting in dramatic price reductions.
For patent holders, the compulsory licensing framework introduces a meaningful obligation to work the patent in India and to make the patented invention available at affordable prices. The three-year post-grant window and the requirement to satisfy the Controller that the reasonable requirements of the public are met serve as incentives for voluntary licensing on reasonable terms.
For public health advocates, the compulsory licensing framework — together with the Section 3(d) anti-evergreening provision and the pre-grant opposition mechanism — forms a comprehensive toolkit for ensuring that India's patent system serves public health objectives as contemplated by the Doha Declaration on TRIPS and Public Health.
Related terms
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Frequently asked questions
Has India ever granted a compulsory licence?
Yes. India has granted one compulsory licence — to Natco Pharma in 2012 for Bayer's anti-cancer drug Sorafenib Tosylate (Nexavar). The licence was upheld by the IPAB, the Bombay High Court, and the Supreme Court (which dismissed Bayer's Special Leave Petition in 2014). No other compulsory licence has been granted, though several applications have been filed.
When can a compulsory licence be applied for?
An application for a compulsory licence under Section 84 can be made by any interested person after three years from the date of the grant of the patent. However, under Section 92, the Central Government can issue a compulsory licence at any time in circumstances of national emergency, extreme urgency, or public non-commercial use — without the three-year waiting period.
What royalty is paid under a compulsory licence?
The Controller fixes the royalty at a "reasonable" rate, considering the nature of the invention, the patentee's R&D expenditure, and the ability of the licensee to work the invention at a reasonable profit. In the Bayer v. Natco case, the Controller fixed the royalty at 6% of net sales, which is considered a benchmark for pharmaceutical compulsory licences.
This entry is part of the Veritect Indian Legal Glossary, a comprehensive reference of Indian legal terminology grounded in statutory text and judicial interpretation.
Last updated: 2026-03-27. Veritect provides this content for informational purposes and does not constitute legal advice.