Compulsory Licensing, and What Section 40 Actually Does

In one line

Section 51 is the compulsory licence, section 40 fixes the royalty an innocent infringer must pay, section 41 cancels a registration, all three lie only to a Board that does not exist, and none of them has ever been brought into force.

The distinction the topic turns on

MU asks for "Compulsory Licensing". The Act contains two royalty provisions and only one of them is a compulsory licence.

So the answer to a question on compulsory licensing is section 51, and section 40 is explained as the neighbouring provision it is often confused with.

Section 51: the compulsory licence

Section 51(1), who may apply and to whom. "Notwithstanding anything contained in this Act, the Appellate Board may, on an application made in the prescribed manner before it on behalf of the Government or by any person authorised by the Government, and after giving notice of such application to the registered proprietor and providing the opportunity of being heard to the parties concerned, permit the use of such registered layout-design by the Government or by such authorised person."

Note who cannot apply. A private competitor who simply wants a licence has no standing. The application must be on behalf of the Government or by a person the Government has authorised.

Section 51(1), the five conditions the Board may impose, "any or all of the following, as the Board deems fit":

• (a) that the use shall be for non-commercial public purposes, or for purposes relating to a national emergency or of extreme public urgency;
• (b) that the duration shall be limited to a period the Board specifies;
• (c) that the use shall be non-assignable and non-transmissible;
• (d) that the use shall be to the extent the Board deems necessary to remedy an anti-competitive practice;
• (e) that the use shall be predominantly for the supply of semiconductor integrated circuits, or articles incorporating them, in the domestic market of India.

The first proviso, prior negotiation. The Board shall not permit the use by a person authorised by the Government unless it is satisfied that he "has made efforts to enter into agreement with the registered proprietor on reasonable commercial terms and conditions for permitted use, and such efforts had not been successful within the prescribed period".