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Understand compulsory patent licenses in Pakistan. Learn Section 58-60 Patents Ordinance rules, TRIPS flexibilities, pharmaceutical waivers, and royalties.
By Syed Asad Hussain Zaidi · 8 September 2026
Author Note / Last Updated: Updated September 2026 by Syed Asad Hussain Zaidi | Advocate High Court | Senior Patent Prosecution & Public Policy Counsel. A patent is a formidable 20-year legal monopoly granted by the State, conferring upon the patentee the exclusive right to exclude all other market participants from manufacturing, using, importing, or selling the patented invention. However, in emerging markets like Pakistan, this economic monopoly is not absolute. When a foreign multinational hoards a critical pharmaceutical drug, charges extortionate prices that put life-saving medicines out of reach of ordinary citizens, or refuses to manufacture a vital technological invention domestically, the law provides a crucial sovereign emergency brake: Compulsory Patent Licensing. Codified primarily in Chapter XI (Sections 58 through 63) of the Patents Ordinance, 2000 (Ordinance LXI of 2000), compulsory licensing empowers the Federal Government and the Controller of Patents to authorize domestic manufacturers to produce and distribute a patented invention without the consent of the patent owner, subject to payment of reasonable statutory royalties. Anchored firmly in the WTO TRIPS Agreement (Article 31) and the historic Doha Declaration on TRIPS and Public Health (2001), compulsory licensing sits at the delicate crossroads of international trade commitments, pharmaceutical patent protection, and constitutional guarantees of the right to health. This legal analysis provides pharmaceutical executives, health policy strategists, and corporate IP attorneys with an exhaustive guide to compulsory patent licensing under Pakistani law. --- The Statutory Architecture: Balancing Monopolies with Public Interest The underlying philosophy of Pakistani patent law is that patents are granted not only to reward inventors, but to ensure that inventions are worked within Pakistan on a commercial scale without undue delay: International Law Alignment: Article 31 of TRIPS & Doha Declaration Under the World Trade Organization (WTO) Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), developing countries retain inherent sovereign "flexibilities" to safeguard public health: Paragraph 5(b) of the Doha Declaration: Affirms that each WTO Member has the right to grant compulsory licenses and the freedom to determine the grounds upon which such licenses are granted. Paragraph 5(c) of the Doha Declaration: Affirms that each Member has the right to determine what constitutes a national emergency or other circumstances of extreme urgency, explicitly recognizing that public health crises (e.g., HIV/AIDS, tuberculosis, malaria, and viral epidemics) can represent emergencies. Pakistan integrated these international flexibilities directly into Sections 58, 59, and 60 of the Patents Ordinance, 2000. --- Statutory Grounds for Compulsory Licensing (Section 58) Under Section 58(1) of the Patents Ordinance, 2000, any interested person may apply to the Controller of Patents for the grant of a compulsory license on any of the following statutory grounds, provided that four (4) years from the date of filing of the patent application or three (3) years from the date of the grant of the patent (whichever expires later) have elapsed: Ground 1: Failure to Work the Invention in Pakistan A patentee cannot simply obtain a patent in Pakistan to lock the market and prevent domestic industrial development. If the invention is not being manufactured or worked within Pakistan on a commercial scale, or is only being imported in negligible quantities, a compulsory license may be granted to a domestic manufacturer equipped to satisfy demand. Ground 2: Unmet Market Demand and Exorbitant Pricing If the reasonable requirements of the Pakistani public with respect to the patented invention have not been satisfied, or the patented article is sold at prices that are artificially exorbitant compared to production costs (e.g., expensive imported cancer therapies or hepatitis antivirals), domestic generic companies can apply for a license to manufacture affordable local equivalents. Ground 3: Refusal to License on Reasonable Commercial Terms If an interested domestic manufacturer approached the patent owner with a bona fide commercial offer to license the patent on fair, reasonable, and non-discriminatory (FRAND) terms, and the patentee unreasonably rejected the offer, resulting in prejudice to the establishment of a new domestic trade or industry in Pakistan. Ground 4: Dependent Patents (Section 58(2)) If a Pakistani inventor develops a second, highly significant technological improvement that cannot be worked without infringing an earlier basic patent, the Controller may grant a compulsory license for the earlier patent, provided the second invention involves an important technical advance of considerable economic significance. --- The Emergency Track: Section 59 Public Health & Crisis Powers While Section 58 governs routine commercial applications, Section 59 of the Patents Ordinance, 2000 establishes the sovereign emergency mechanism: The Power of Immediate Exploitation: Waiver of Prior Commercial Negotiations: In a national healthcare emergency (e.g., widespread dengue outbreaks, respiratory pandemics, or critical antibiotic shortages), the applicant or domestic pharmaceutical plant is not required to spend months attempting to negotiate a voluntary license. The Federal Government issues an immediate executive directive. Notification Post-Facto: The patentee is simply notified of the government authorization as soon as is reasonably practicable. Defense Against Injunctions: A foreign patent owner cannot obtain a civil injunction from the High Court to halt production authorized under Section 59, as the statutory authorization operates as a matter of sovereign public policy. --- The Procedural Roadmap to Obtain a Compulsory License Securing a compulsory license through the Patent Office at Karachi involves a rigorous quasi-judicial process: Phase 1: The Preliminary Negotiation Requirement (Section 58) For non-emergency applications, the applicant must demonstrate that they made efforts to obtain authorization from the patentee on reasonable commercial terms and conditions, and that such efforts were not successful within a reasonable period of time (typically 90 to 180 days). Phase 2: Lodging Form 7 and the Statement of Grounds The applicant files a formal petition on Form 7 accompanied by the prescribed fee, verified by an Advocate of the High Court. The petition must provide: Comprehensive technical profile of the applicant's manufacturing infrastructure (e.g., cGMP-certified pharmaceutical facility approved by DRAP). Detailed economic proof of unmet market demand in Pakistan. Price comparison tables contrasting the foreign patentee’s retail price versus the applicant’s projected domestic selling price. Proposed royalty rate and commercial payment schedule. Phase 3: Controller's Notice & Hearing The Controller serves a copy of the petition upon the patentee. The patentee is granted an opportunity to submit a written reply contesting the grounds (e.g., arguing that manufacturing in Pakistan is economically unfeasible or that market demand is fully met via authorized imports). The Controller convenes a formal hearing where technical experts, economists, and legal counsel present arguments. --- Terms, Conditions & Royalties under Section 60 A compulsory license is not an outright confiscation of the patent; it is a strictly regulated statutory license subject to mandatory statutory safeguards under Section 60 of the Patents Ordinance, 2000: Determining "Adequate Remuneration" (Royalty Benchmarks): Pakistani law and international TRIPS jurisprudence reject both zero-royalty confiscation and exorbitant licensing demands. The Controller determines royalties based on established global guidelines: The UNDP / WHO Tiered Royalty Method: Royalties in developing countries for essential medicines typically range between 2% and 5% of the licensee’s net ex-factory sales price. Economic Value: Higher royalties (6% to 8%) may be awarded for high-tech industrial electronics or non-essential consumer goods; lower royalties (1.5% to 3%) are standard for life-saving oncology or infectious disease treatments. --- Real-World Case Scenarios: Pharmaceuticals & DRAP Synergy The primary battlefield for compulsory patent licensing in Pakistan is the healthcare sector: Navigating DRAP (Drug Regulatory Authority of Pakistan) Linkage: A compulsory patent license from the Patent Office grants permission under IP law, but the generic product cannot be sold in pharmacies without DRAP Drug Registration (Form 5 / Marketing Authorization). Domestic manufacturers must file expedited bio-equivalence and safety dossiers with the DRAP Registration Board. Under Pakistani law, the Patent Office and DRAP operate under distinct statutory frameworks: DRAP is not an IP enforcement body and cannot withhold drug registration merely because a foreign patent exists, particularly when a compulsory license has been sanctioned. --- Strategic Checklist for Domestic Manufacturers & Patent Holders Whether seeking to unlock a patented technology or defending an international patent portfolio in Pakistan, verify these strategic checkpoints: For Domestic Manufacturers Seeking a License: [ ] Verify Patent Status: Confirm the patent has passed the 3-year post-grant / 4-year post-filing threshold of Section 58. [ ] Document Commercial Negotiations: Maintain written records of voluntary license requests made to the patentee, including formal royalty offers and refusal letters. [ ] Audit Domestic Manufacturing Capability: Ensure your factory holds valid DRAP cGMP certifications or ISO manufacturing licenses capable of scaling production immediately upon grant. [ ] Prepare Economic Pricing Dossiers: Submit audited cost breakdown models proving substantial public price reductions compared to the imported patented article. For Foreign Patent Owners Defending Against Compulsory Licensing: [ ] Evidence Commercial Scale Working: Document local distribution agreements, hospital tenders, and continuous import volumes satisfying market demand. [ ] Establish Differential / Access Pricing: Implement tiered compassionate pricing programs or local patient assistance programs (PAPs) in Pakistan to defeat the "exorbitant pricing" ground. [ ] Respond to Voluntary Licensing Bids: Never ignore domestic licensing inquiries; respond with commercially reasonable terms to defeat the "unreasonable refusal" ground. [ ] Monitor Patent Office Gazette: Regularly monitor IPO-Pakistan gazette notices to contest Form 7 petitions within the statutory response window. --- Conclusion: Balancing Innovation Incentives with Sovereign Public Welfare Compulsory licensing under the Patents Ordinance, 2000 is not an instrument of hostility against foreign innovation; it is a vital constitutional and economic balancing mechanism designed to prevent patent abuse and protect public welfare. For domestic Pakistani manufacturers, it offers a lawful, internationally sanctioned pathway to produce vital medicines, agricultural technologies, and industrial machinery at prices the nation can afford. For foreign patent owners, understanding statutory working obligations and pricing benchmarks is essential to safeguarding valuable corporate portfolios. For specialized legal advice on compulsory patent licensing petitions, TRIPS flexibilities, DRAP regulatory coordination, or defending international patents before the Controller in Karachi, contact our Patent & Public Policy Practice Group at TaxCalc.pk / Zaidi & Associates.