This isn't case of tech theft

India's National Manufacturing Policy, that intends to ensure the success of the Make in India programme, has also given a push to the Technology Acquisition and Development Fund, which will help promote access to technology through patent pooling and compulsory licensing of patents. The draft Intellectual Property Rights Policy that is being discussed here also supports compulsory licensing. India has been trying to develop political consensus on compulsory licensing for promoting access to technology particularly for green technologies at the UN Framework Convention on Climate Change and other fora.

Developed countries have been strongly opposing such an approach and dub it as theft. Compulsory licensing is the grant of permission to use patented technology without the consent of the patent holder but, of course, with a compensation to be decided either mutually or by the Government. Interestingly, compulsory licensing isn't an idea created by India or any other developing country. It is prevalent in several developed world jurisdictions including the US and the EU. As a patent gives monopoly rights to its owner, compulsory licensing is a tool to balance the arrangement so that the owner doesn't abuse its acquired monopoly position.

Till date, the US has issued the largest number of compulsory licenses in the world. In comparison, India has successfully issued a compulsory license only once in more than 100 years of its experiment with patent law since 1911. The Government granted a compulsory license for Nexavar (Sorafenibtosylate), that had been patented by Bayer, to Natco pharma on March 9, 2012. Nexavar is a crucial medicine for kidney and liver cancer. After rounds of litigations, the compulsory license was finally cleared by the Supreme Court on December 12, 2014. Twice before, in the 1960s, India had taken the initiative of granting compulsory license of patents owned by foreign companies but had failed.

The question here is: Why do developed countries, that liberally use the compulsory licensing tool, get annoyed when India grants just one compulsory licence? The reason is not difficult to understand. Apart from the fact that some medicines in the US cost 300 times more than in India, in case of a conflict between the patent holder and the consumer, in a developed country, the Government cannot blindly side with a private company. However, if the conflict is between a private company and a consumer in another country, the Government usually supports the corporate. There have also been situations when complementary patents were held by rival companies, and as a result the inventions were not working. The US forced patent pooling, often with compulsory licenses, to ensure that the new knowledge benefitted society.

Over the last few years, developed countries have tried to convince developing countries that granting compulsory licensing is against their commitments at the World Trade Organisation and also put political pressure to restrain them from issuing compulsory licenses. But such efforts haven't succeeded, as developing countries have gone ahead with granting compulsory licenses. Hence, developed countries are now using the bogey of reluctant foreign investment - they argue that developing countries with 'weak' patent laws won't attract the much needed FDI.

According to India patent law, the major ground for issuing a compulsory license is that the patent in question is not working in the country. This means if a patent holder has not been able to produce something in India using the patent technology or has not licensed the technology to any other company in India to produce the relevant product, then it will have the risk of its patented technology being granted licence to some other company. It is clear that such a threat will encourage the patent holder concerned to invest and produce in India to avoid a situation wherein another company could get the licence of its patented technology without its consent. Hence the argument that compulsory licensing discourages foreign investors defies logic.

Of course, foreign companies want strong patent regimes. The essential condition for getting a patent is that disclosure of the new technology. Hence any patented technology is public knowledge. The technology is disclose with the assurance that nobody else will be able to use it. Hence, if a technology is already public knowledge, then how will a foreign company protect it better by not coming to India? If the knowledge in question is a trade secret, then one can accept that going to a foreign country with weak enforcement of trade secrets can involve some risk. However, in case of patented knowledge, not going to a foreign country which may have a weak patent regime but otherwise offers huge opportunities, amounts to ostrich-like behaviour.

FDI in China picked up with the beginning of 1980s even though its patent regime was one of the weakest in the world. Many commentators then argued that foreign companies felt that having a local presence helped them prevent potential infringement of their patented technologies or getting remedies in case of actual infringement.

Developed countries have been trying to make IPR regimes in developing countries stronger and have been successful in this regard, having signed several trade agreements with higher IPR standards. What benefits these agreements have brought to the developing countries is questionable but they have made access to cheap medicines and technologies more difficult. India will face even more pressure in the coming days, alongwith spurious ideas and specious arguments. It must hold its own.