Section 90 of the Patents Act, 1970
Terms and conditions of compulsory licences
Tells the Controller what terms a compulsory licence must carry, from a reasonable royalty to non-exclusivity and supply mainly for India.
Official legal text
The verbatim statutory text of this provision is reproduced from the official source and checked by our legal reviewer before it is published here. Until that check is complete for this page, read the exact wording directly from the official source linked below — it is the only version that governs.
This explanation is written for clarity, not for citation. The official statutory text and any Gazette notification in force on your date govern, and they prevail over anything said here.
What this section says, in plain language
Granting a compulsory licence is only half the job. The order also has to say what the licensee may do, what it must pay, and for how long. Section 90 sets the framework for those terms, and it is written as a list of things the Controller must try to secure.
On money, the royalty and other remuneration paid to the patentee must be reasonable. The Controller weighs the nature of the invention, what the patentee spent on making and developing it, what it cost to obtain the patent and keep it in force, and any other relevant factors. There is no fixed percentage in the Act. At the same time, the Controller must secure that the patented article is available to the public at reasonably affordable prices, and that the licensee can work the invention to the fullest extent with a reasonable profit.
On scope, the licence is to be non-exclusive, so the patentee may still work the invention itself and may still license others. The licensee's right is non-assignable, meaning it cannot simply be sold or transferred to someone else. The licence normally runs for the balance of the patent's term, unless a shorter period is consistent with the public interest.
On market direction, the licence is granted with the predominant purpose of supply in the Indian market. Export is not entirely shut out: the licensee may also export where the Act allows, and where the licence was granted to remedy conduct found to be anti-competitive after a judicial or administrative process, export is expressly permitted. A special rule applies to semiconductor technology, where any compulsory licence is limited to public non-commercial use.
Finally, the section restricts importing. A compulsory licence does not by itself authorise the licensee to import the patented article, or an article made by the patented process, where that import would infringe the patent. The Central Government may, where it considers it necessary in the public interest, notify that such importation is not to be treated as infringement, which is the safety valve for genuine public-health emergencies.
Why this section matters
Compulsory licensees who must live with the terms, patentees whose remuneration is being fixed, and anyone modelling the economics of a licence.
At the stage when the Controller settles the order, and afterwards whenever the licensee's rights or obligations are questioned.
A statutory template for the terms of a compulsory licence, including royalty, duration, non-exclusivity, non-assignability and market direction.
A licensee who assumes it can export freely, sub-licence, or import the product may act outside the order and lose the protection the licence gives.
How it works in practice
Settling the terms of a licence for an insulin pen
The Controller decides to grant a compulsory licence over a patented insulin pen mechanism to Nirogya Devices Pvt Ltd of Ahmedabad. The hearing then moves to terms. Nirogya proposes a low royalty and asks for export rights across South Asia. The patentee argues for a high royalty, citing twelve years of development and the cost of maintaining the patent, and asks that the licence run for three years only. Applying Section 90, the Controller fixes a royalty he considers reasonable in light of the development spend and the nature of the invention, and sets a ceiling price so the pen is available to patients at a reasonably affordable price while leaving Nirogya a reasonable profit. He records that the licence is non-exclusive, cannot be assigned, and runs for the balance of the term. He states that the predominant purpose is supply to the Indian market, and confirms that Nirogya is not authorised to import finished pens from abroad under this order.
Simplified illustration only. Actual legal outcomes depend on the facts.
Key points to remember
- The royalty must be reasonable and is fixed case by case, with no percentage written into the Act.
- Prices must be reasonably affordable for the public while allowing the licensee a reasonable profit.
- Every compulsory licence is non-exclusive and the licensee's right cannot be assigned.
- The licence normally lasts for the remaining term of the patent unless a shorter period serves the public interest.
- Supply must be predominantly for the Indian market, with limited export permitted, including where the licence remedies anti-competitive conduct.
- Semiconductor technology licences are confined to public non-commercial use.
- The licence does not authorise infringing imports unless the Central Government notifies otherwise in the public interest.
Common mistakes and misunderstandings
- Believing a compulsory licence gives exclusivity. It never does; the patentee can keep selling and can license others.
- Planning an export-led business on a compulsory licence. The predominant purpose must be Indian supply, and export is allowed only within the Act's limits.
- Assuming the licence can be transferred to a joint venture or buyer. The right is non-assignable.
- Expecting a standard royalty rate. The Controller sets it on the evidence in each case.
Connected provisions
- ActSection 84Compulsory licences
- ActSection 88Powers of Controller in granting compulsory licences
- ActSection 89General purposes for granting compulsory licences
- ActSection 93Order for licence to operate as a deed between parties concerned
- ActSection 94Termination of compulsory licence
- ActSection 92ACompulsory licence for export of patented pharmaceutical products in certain exceptional circumstances
Sections and rules are different kinds of law. A section is enacted by Parliament, while a rule is made by the Central Government using powers the Act grants. Keeping them apart shows which text you are reading and which of the two is more likely to have been revised recently.
Forms, deadlines and fees
- A compulsory licence normally runs for the balance of the patent's term unless the Controller sets a shorter period in the public interest.
Open the deadline calculator — and have every date confirmed against the current Rules before you rely on it.
Any official fee connected with this provision is fixed by the First Schedule to the Patents Rules, not by the provision itself. The amount depends on who the applicant is and on whether the filing is made online or on paper, so no figures are reproduced here. How Indian patent fees work.
Amendment history
What changed in this provision, newest first. Read the footnotes in the official consolidated text for the full record.
- 2005The Patents (Amendment) Act, 2005The terms that may be settled in a compulsory licence were widened, including licences granted to remedy anti-competitive practices and licences for semiconductor technology limited to public non-commercial use.
Compiled from official consolidated texts and Gazette notifications. See the site-wide change log.
Related judgments
Bayer Corporation v. Union of India, Controller of Patents and Natco Pharma Ltd.
Writ Petition No. 1323 of 2013 (Bombay High Court, judgment dated 15 July 2014) · Judgment source ↗
Question before the courtWhether India's first compulsory licence, granted over a patented cancer medicine, was validly granted under section 84.
HeldThe Court upheld the compulsory licence. It found all three grounds in section 84(1) made out. Supply had reached only a small fraction of the patients who needed the medicine, so the reasonable requirements of the public were not being met. A discretionary patient assistance scheme did not answer the separate question of a reasonably affordable price, which is judged largely from the public's side. On working in India, the Court accepted that importation can amount to working, but said the patentee must justify why local manufacture was not attempted.
Case notes are written in our own words from the judgment and are published only after legal review. They are not advice and not a prediction about any other matter. All case notes.
Questions people ask about Section 90
How is the royalty for a compulsory licence decided?
The Controller decides it after hearing both sides. The Act tells him to secure a royalty and other remuneration that is reasonable, having regard to the nature of the invention, the expenditure the patentee incurred in making the invention and developing it, the cost of obtaining and maintaining the patent, and other relevant factors. In practice, parties file evidence on development spend, comparable licence rates, expected volumes, cost of goods and the price the public can bear. The outcome is a rate specific to that patent and that market.
Can a compulsory licensee export the patented product?
Only within limits. The licence is granted with the predominant purpose of supplying the Indian market, so an export-first plan is not what the section contemplates. Export is allowed to the extent the Act permits, and it is expressly permitted where the licence was granted to remedy a practice determined, after a judicial or administrative process, to be anti-competitive. Export of medicines to countries that cannot manufacture them has its own separate route under Section 92A rather than under this section.
Can I sub-licence or sell a compulsory licence?
No. Section 90 requires that the right of the licensee be non-assignable. The licence is personal to the person the Controller granted it to, because the Controller assessed that applicant's capacity, capability and ability to work the invention to the public advantage. If your business is restructured, sold or merged, take advice before assuming the licence travels with it. The Controller's order should be read carefully, since it may also carry specific conditions on manufacturing sites and supply.
What terms will your compulsory licence actually carry?
MYCrave models royalty, pricing and supply conditions under Section 90 so you know the economics before the Controller settles the order.
You will be speaking with MYCrave Consultancy & Services, the firm that operates this platform. General questions are answered free; matter‑specific work is quoted before anything is done.