Compulsory Licensing of Patents in Nepal

The working requirement

The 1965 Act carried a development-era premise: patents exist to bring technology into Nepal, not merely to exclude others from it. The statute therefore expects the patentee to work the invention in Nepal — to make or otherwise use it industrially here — within a defined period after registration. A patent that is worked is left entirely alone.

Where the patentee has not worked the invention, the statute opens the compulsory route: an interested person may request that the Department grant them a licence to work the patented invention, and the Department — after hearing the patentee — may grant it, fixing the scope, duration and royalties. The patentee keeps ownership; what is at stake is the exclusivity.

• Expectation: the patentee works the invention in Nepal after registration
• Request-based: an interested party asks; the Department decides after hearing both sides
• Outcome if granted: the requester works the invention on Department-fixed terms — the patent itself stays yours

Who the regime actually threatens

In practice, the exposure is concentrated, and knowing the profile clarifies the response. Most exposed: patents held speculatively — registered for defensive or portfolio reasons with no Nepalese working and no plan for it — and foreign-owned patents kept on the register purely to block imports of competing technology. Least exposed: patents that are actively worked — manufactured locally, used in local production, or exercised through recorded local licensees — and patents whose non-working reflects ordinary commercial timing rather than indefinite dormancy.

Two features soften the regime's edge. The request must come from an interested party with standing — not from the Department sua sponte in the ordinary course. And the grant is a licence, not revocation: the patentee's remedy is engagement with the Department's process, not the loss of the registration itself.

• High risk: dormant defensive patents, block-only registrations
• Low risk: worked patents, licensed working, normal launch timelines
• Worst case is a licence, not forfeiture — engagement beats absence

Neutralising the exposure

The defensive playbook is short and entirely legitimate. Work the invention: local manufacture or use is the cleanest answer. License it: a recorded local licensee working the invention satisfies the policy — recordal matters, because unrecorded arrangements are invisible to the Department (Section 21D, NPR 5,000 for patents). Document commercial activity: imports under the patent, investments toward production, and market-launch timelines all evidence a patent being exercised, not warehoused. Respond, always: if a compulsory-licence request arrives, participate — an unrepresented patentee forfeits the argument.

The strategic frame for foreign patentees: Nepal's market size means the compulsory-licence risk is rarely the main consideration — the 21-year term ceiling and the maintenance calendar usually matter more. But the working requirement is one more reason not to file patents here speculatively: Nepal rewards exercised rights and prunes dormant ones, through both the renewal clock and the licensing regime.

• Work it, license it (recorded), or document the activity
• Recorded licensees are visible to the Department — unrecorded ones are not
• If a request comes: engage, with evidence of plans or activity

The reform horizon

Compulsory licensing sits at the intersection of industrial policy and the TRIPS framework — TRIPS permits compulsory licences under conditions Nepal's next statute will codify more precisely. The draft Industrial Property Bill is expected to modernise the mechanism: clearer grounds, defined procedure and TRIPS-consistent safeguards. Until then, the 1965 Act's regime — request-based, discretionary, rarely used — remains the live law.