Section 94 of the Patents Act, 1970
Termination of compulsory licence
Allows a compulsory licence to be ended when the circumstances that justified it have gone and are unlikely to come back.
Official legal text
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The authority is the enacted text, not this page. Where our wording and the official provision, or an applicable Gazette notification, do not match, the official material prevails.
What this section says, in plain language
A compulsory licence is a remedy for a problem, not a permanent transfer of rights. Section 94 provides the exit. The patentee, or any other person deriving title or interest in the patent, may apply to the Controller to terminate a licence granted under Section 84 on the ground that the circumstances that gave rise to the grant no longer exist and are unlikely to recur.
The test has two limbs and both must be met. It is not enough that supply has improved for a quarter or that a price has been cut while the application is pending. The applicant has to show that the underlying position has genuinely changed, for example that Indian manufacture is now established and demand is being met at a reasonable price, and that the change is durable rather than tactical.
The licensee is protected in two ways. First, the holder of the compulsory licence has an express right to object to the termination, so the application is decided after hearing both sides. Second, the Controller must have regard to the licensee's legitimate interests. A licensee that has built a plant, hired staff and taken supply commitments on the strength of the licence has invested in reliance on the order, and that investment is a relevant consideration.
Applications under this section are dealt with under Rule 102 of the Patents Rules, 2003, with the fee prescribed in the First Schedule. As with other proceedings before the Controller, the application should set out the facts relied on and be supported by evidence such as production and sales figures, pricing data, distribution records and independent demand assessments.
The outcome is not limited to a straight yes or no in practice. The Controller decides on the material before him, and the parties often use the proceeding to settle a voluntary arrangement instead, since both sides usually prefer a negotiated transition to a sudden end of supply.
Why this section matters
Patentees and their successors in title who want their exclusivity restored, and compulsory licensees who have built a business on the order.
After a compulsory licence has been granted, once the patentee believes the market failure that justified it has been fixed for good.
A right for the patentee or a successor to apply for termination, and a right for the licensee to object and be heard.
A patentee that never applies leaves the licence running for the balance of the term; a licensee that ignores a termination application risks losing its rights without putting its investment on record.
How it works in practice
The patentee builds a plant and asks for its exclusivity back
Three years after a compulsory licence was granted over a patented water-purification membrane, the patentee has changed course. It has built a manufacturing line in Sriperumbudur, cut its Indian price by more than half, signed supply agreements with four state boards, and now meets national demand with capacity to spare. It applies under Section 94, filing production data, price lists, distribution records and an independent demand study to show that the shortage and pricing problems that justified the licence have gone and are unlikely to return. The compulsory licensee, an MSME in Nashik, objects. It shows that it invested in a dedicated line, employs sixty people, and has three-year contracts with municipal buyers that it cannot walk away from. The Controller hears both sides. He must decide not only whether the circumstances have genuinely changed and are unlikely to recur, but also how the licensee's legitimate interests are to be protected.
Simplified illustration only. Actual legal outcomes depend on the facts.
Key points to remember
- Only the patentee or a person deriving title or interest in the patent can apply for termination.
- The circumstances that led to the licence must no longer exist and must be unlikely to recur.
- The compulsory licensee has an express right to object and to be heard.
- The licensee's legitimate interests, including investment made in reliance on the licence, must be considered.
- Applications are dealt with under Rule 102 with the fee prescribed in the First Schedule.
- Termination is a decision on evidence, not an automatic consequence of improved supply.
Common mistakes and misunderstandings
- Applying on the strength of a short-term improvement. The Controller looks for a durable change, not a temporary one made to support the application.
- Assuming termination is automatic once the patentee starts manufacturing in India. The licensee's position and the recurrence test both matter.
- As a licensee, treating the application as a formality. Failing to file evidence of investment and commitments weakens the objection considerably.
- Confusing termination with revocation. Termination ends the licence and restores the patentee's exclusivity; revocation under Section 85 ends the patent itself.
Connected provisions
You will find the related rules grouped below rather than inside the explanation. The separation is deliberate. The Act and the Rules are distinct legal instruments, and mixing them can lead a reader to attribute a procedural requirement to the statute itself.
Forms, deadlines and fees
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.
Related judgments
Case summaries are published only after a qualified reviewer has checked the judgment, the citation and the way the holding is described. Nothing has cleared that review for this provision yet, so nothing is listed here. We would rather show no case note than one that misstates what a court decided. How case notes are prepared.
Questions people ask about Section 94
Who can apply to terminate a compulsory licence?
The patentee, and any other person deriving title or interest in the patent, such as an assignee or a successor after a merger. The compulsory licensee cannot use this section to end its own licence, though it may of course stop working the invention and deal with the consequences under the order. The application goes to the Controller, is dealt with under Rule 102 with the prescribed fee, and must be supported by evidence that the circumstances that led to the grant have genuinely changed.
Can a compulsory licensee resist termination?
Yes. The Act expressly gives the holder of the compulsory licence the right to object. The licensee should put on record what it invested in reliance on the licence, such as plant, tooling, quality approvals, staff and supply contracts, and should test the patentee's claim that the earlier problem is fixed for good. Evidence about current shortages, pricing, or the patentee's dependence on imports is directly relevant, because the section requires the change of circumstances to be unlikely to recur.
What happens to supply contracts if the licence is terminated?
Once the licence ends, the former licensee no longer has permission to make or sell the patented product in India, so continuing to supply would be infringement. This is why the licensee's legitimate interests are part of the decision, and why parties often negotiate a transition, such as a run-off period, a voluntary licence on commercial terms, or the patentee taking over existing contracts. Read the Controller's order and your customer contracts together before assuming what happens on termination.
Should a compulsory licence over your patent end now?
MYCrave builds or answers Section 94 termination applications with the supply, pricing and investment evidence the Controller weighs.
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