For every incremental listener hour, it pays out additional dollars to music companies through something called a compulsory license.

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Medecins Sans Frontieres said it was "relieved" with the decision by the board to uphold India's first compulsory license.

WSJ: India Rejects Bayer's Nexavar Plea

This is the first case in India of a company being granted a "compulsory license" to manufacture a patented drug.

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The patent authority's March 2012 order on Nexavar represented the first instance of a compulsory license being granted in the country.

WSJ: India Rejects Bayer's Nexavar Plea

The German company last year approached the Intellectual Property Appellate Board after the local patent authority granted a "compulsory license" to Natco Pharma Ltd.

WSJ: India Rejects Bayer's Nexavar Plea

This change could force a compulsory license on the patentee -- and likely violate the "exclusive" ownership rights guaranteed in the Constitution and essential to U.S. innovation.

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The appellate board, which is based in the southern city of Chennai, said the patent authority was right in allowing a compulsory license for Nexavar as Bayer hadn't priced the drug at "reasonably affordable" rates.

WSJ: India Rejects Bayer's Nexavar Plea