Make in India is bound to succeed with the powerful global initiative by the Prime Minister of India and his team. The latest amendment notification it has become all the more closer and faster to success. The latest notification is reproduced below:

S.O.1233(E) dated 8th May, 2015, in exercise of the powers conferred by Section 3 of the Essential Commodities Act 1955 (10 of 1955), the Central government hereby makes the following amendment in the Drugs Price Control Order, 2013 issued by the Ministry of Chemicals and Fertilizers, Department of Pharmaceuticals, and published in the Gazette of India, Extraordinary, Part II, Section 3, Subsection (ii), dated the 15th May 2013, namely: In the said order, in paragraph 2, for clause (n), the following clause shall be substituted, namely: ‘(n) “manufacturer” for the purpose of this Order means any person who manufactures or imports or markets drugs for distribution or sale in the country’.

As per this amendment to “manufacturing”, importation into India is also covered in “Make in India”. The devils advocate will argue that this notification is related to Drug Price Control Order (DPCO) and also complies with Art. 27(1) of Trade-Related Aspects of Intellectual Property Rights (TRIPs) which states:

Patentable subject matter
Subject to the provisions of paragraphs 2 and 3, patents shall be available for any inventions, whether products or processes, in all fields of technology, provided that they are new, involve an inventive step and are capable of industrial application. Subject to paragraph 4 of Article 65, paragraph 8 of Article 70 and paragraph 3 of this Article, patents shall be available and patent rights enjoyable without discrimination as to the place of invention, the field of technology and whether products are imported or locally produced.

While “Make in India” succeeds, “compulsory licence” provisions under Section 83 to 100 could die a natural death, since for the first time, there is a definition available for “manufacturer”, though extrinsically.

Section 84 of the Patents Act, 1970 reads as follows:
Section 84 Compulsory licences -(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 the 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 reasonably affordable price, or
c) that the patented invention is not worked in the territory of India.

In the Order of the Controller General of Patents, Designs & Trademarks, granting the only compulsory licence in and from India, it was stated as follows:
the patented invention is not worked in the territory of India.
The term 'work the invention' does not include imports as a compulsory license holder has to necessarily work the patent by manufacturing the patented invention in India. If, the licensee cannot import the product into India, for working the invention under the terms of license, barring exceptional circumstances mentioned in Section 90(3) of the Act, then is implies that importing cannot amount to working for a licensee. A combined reading of these provisions implies that the same logic must apply with respect to the Patentee as well.

From all the aforementioned indications, it is clear to me that the Paris Convention and TRIPS Agreement and Patents Act, 1970 read together do not in any manner imply that working means importation. I am therefore convinced that 'worked in the territory of India' means 'manufactured to a reasonable extent in India'.

In the instant case, the patent was granted in the year 2008. It is an admitted fact that the patentee does have manufacturing facilities for manufacturing drugs in India, including oncology drugs. However, even after the lapse of four years from the date of grant of patent, the patentee failed to do so. The patentee has also failed to grant a voluntary license on reasonable terms to anyone including the applicant herein to work the invention within the territory of India.  Accordingly, hold that Section 84(1)(c) is attracted in this case and consequently a compulsory license be issued to the applicant under Section 84 of the Act.

Having defined “manufacturing” to cover “importation”, an applicant for compulsory licence can no more seek or expect to fully comply with provisions of Section 84 (c).

All the three preconditions of Section 84 are likely to be not met; as long as a patented drug is being imported to India (need not be manufactured in India) for future compulsory licence applications.

The compulsory licence provision virtually became redundant after the then Controller General passed the only order on 9th March 2012. The later order rejecting the second compulsory licence gave only reason as “the applicant has not exhausted all the options to get a voluntary licence from the patentee” when the patentee had already sued the compulsory licensing applicant three years before (2009) and the suit from the patentee against the compulsory licence applicant is still pending even after three years of the rejection of the compulsory licensing by the sued applicant.

Compulsory licensing can be declared “dead” for one more reason. “United you win, Divided you fall” is a proverb with the demonstration of a bundle of sticks not breaking, while each stick breaks individually. Except on few very common grounds (pet bottles or DPCO for example), Pharmaceutical industry is mostly divided. On the issue of compulsory licence also the pharmaceutical industry is “united” by default. Surprised? The four distinct sectors or segments of the pharmaceutical industry in India are:

1. MNCs – who are members of OPPI (Organisation of Pharmaceutical Producers of India)
2. Research-based larger Indian companies – who are members of IPA (Indian Pharmaceutical Alliance)
3. Small-medium companies (predominantly) – who are members of IDMA (Indian Drug Manufacturers’ Association)
4. Very small and localized pharmaceutical companies – who are members of local or state associations. They constitute 90 per cent of Indian pharmaceutical manufacturers in numbers.

The Organisation of Pharmaceutical Producers of India members are vociferously against the compulsory licensing (successfully supported by USTR and Super 301 conditions and cautions). The IPA has publicly announced that IPA members prefer the voluntary licence route and hence will not opt for compulsory licensing. The fourth group of tiny and small pharmaceutical companies as well as large majority of IDMA (99 per cent) are not concerned with WTO, TRIPs or Compulsory Licensing. What is left is a mere 1 per cent of one of the four groups as above. They have neither the financial muscle power to fight long drawn out legal battles for compulsory licensing nor the political clout.  With the newest amendment of “manufacturing in India” being interpreted to include “importing into India”, while make in India succeeds, the Section 84 (1)(c) provision of compulsory licence will forever remain unmet.