A ‘patent’ can be defined as the title granted to protect an invention, whether it may relate to a product or a process. This title grants certain exclusive rights to the patent holder. Yet, the exclusivity and monopoly provided by these rights can often lead to its misuse. The most common example of its misuse can be seen in the pharmaceutical sector, wherein the patented medicines are sold at exorbitant prices, thereby making them out of reach for large sections of the society. Therefore, in reply to such abuse of patents, there exists a solution in the form of compulsory licensing.
A compulsory licence is most commonly defined as an involuntary contract between a willing buyer and an unwilling seller imposed and enforced by the State. There are generally two kinds of licensing: voluntary and compulsory licensing. A voluntary licence can be granted at any time, by the patent holder himself, upon mutually agreed terms and conditions, for the buyer of the licence to use the patent. On the other hand, compulsory licence is one that is issued by a state authority to a government agency, a company or any other party to use a patent without the patent holder’s consent. This article examines the international and domestic laws with regard to compulsory licensing, the arguments for and against such a provision, and its importance in the era of a pandemic such as the COVID-19 outbreak.
Compulsory license was recognized under the TRIPS Agreement of 1995, under Article 31. The terminology employed was ‘other use without authorization of the right holder’, allowing for authorization under certain conditions. However, sub-paragraph (f) of Article 31 suffered significant criticism which stated that ‘any such use shall be authorized predominantly for the supply of the domestic market of the Member authorizing such use.’ It was argued that by limiting the use only to the domestic market, it would impede the licensee from aiding other nations that would be in grave need of generic drugs in the event of a public health crisis.
Keeping this in mind, the DOHA Declaration of 2001 recognized the gravity of the public health problems afflicting many developing and least-developed countries. It asserted that the TRIPS Agreement should be interpreted and implemented in a manner supportive of WTO Members’ Right to protect public health and, in particular, to promote access to medicines for all. Paragraph 6 of the Declaration acknowledged that if there were countries with insufficient or no manufacturing capacities in the pharmaceutical sector, then they could face difficulties in making effective use of compulsory licensing under the TRIPS Agreement.’ Therefore, it instructed the Council for TRIPS to find an expeditious solution to the problem.
In response to this, a waiver was introduced in Article 31(f)’s ‘domestic market’ restriction. As a result of such waiver, if a country wanting to avail the product in question, could establish that it had insufficient or no manufacturing capacities in the pharmaceutical sector, then in that case, the restriction provided by the ‘domestic market’ clause could be eased.
AN ANALYSIS OF ARGUMENTS
Most developed countries such as the United States and Britain vehemently oppose the provision for compulsory licensing, whereas developing and least-developed countries represent the other side of the spectrum.
The arguments put forth by developed countries against this provision is that it would hamper innovations by companies, because rather than engaging in expensive research, they ‘would be inclined to sit back and let others do the scientific exploration, and then apply for a license as of right if a worthwhile invention was developed.’ The provision of compulsory licenses would also discourage investors because of the consequent reduction in the possibility of commercial success. In fact, compulsory licensing is viewed as having no place in the U.S Patent Law.
The developing countries, on the other hand, argue that through compulsory licensing, the required products can be procured at little cost, thus making it not only affordable, but also available to large sections of society in dire need of it. Furthermore, most of these countries do not have the infrastructure or technological expertise to produce certain products, and therefore, would require external help.
COMPULSORY LICENCING IN INDIA
In India, the provision for compulsory licenses is made under Chapter XVI of The Patents Act, 1970.
Section 84 dictates that a compulsory license may be granted on certain grounds, after three years have expired since the date of the grant of the patent. However, Section 92 also provides for a special provision for compulsory licenses to be allowed by the Central Government, by notification in the Official Gazette, in cases of:
- National emergency;
- Extreme urgency; or
- Public non-commercial use.
The first case of compulsory license granted in India was that of Bayer Corporation v. Natco Pharma Ltd wherein, the Intellectual Property Appellate Board (IPAB) reaffirmed the compulsory license given to Indian generics Natco Pharma Ltd. for producing and selling ‘Sorafenib’, which was previously the sole domain of Bayer Corporation. Sorafenib was useful for treating liver and kidney cancer and was previously sold for Rs. 2.8 lakh for 120 tablets (equivalent to a month’s dosage). However, after the compulsory license was granted, the price dropped down from 2.8 lakhs to Rs. 8,800 per month.
COMPULSORY LICENCING AND COVID-19
In 1948, the right to have a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care, was declared as a human right by the Universal Declaration of Human Rights. Furthermore, in 1966, the International Covenant on Economic, Social and Cultural Rights, in its Article 12, recognized the right of everyone to the enjoyment of the highest attainable standard of physical and mental health.
This must be kept in mind, because, on March 11, 2020, the World Health Organization declared the outbreak of COVID-19 a pandemic. Today, it has been described as one of the biggest human health crisis the world has faced. At this time, the pharmaceutical companies have jumped to the limelight, and they deserve to get as much help as they can. Issuing a compulsory license would prove invaluable not only in making drugs affordable, but also in aiding research and development for a potential cure. Furthermore, it would make the country completely self-reliant, for if a cure is to be invented, it would help circumvent the exclusive rights of the patent holder with regard to fixing prices and their discretion with regard to exports of such cure. By issuing a compulsory license, one would be able to use a patent without the patent holder’s consent (with the authorization of the Government), and then one could manufacture a generic drug at a much cheaper rate.
Needless to say, countries around the world jumped to action. On 17th March, 2020, the Parliament of Chile unanimously adopted a resolution for the use of compulsory licensing as a means to fight the virus. It resolved to be prepared and to take the necessary measures and resolutions so that appropriate response could be generated from both the public and private sectors.
On 19th March, 2020, Israel issued compulsory licenses for the import of Ritonavir (a potential medicine being tested for COVID-19) from a generic company. On 20th March, the National Assembly in Ecuador approved a resolution asking the Minister of Health to issue compulsory licenses over patents related to Coronavirus technologies.
Canada has also amended its own laws on 25th March, 2020, wherein it made it easier to issue compulsory licenses. While compulsory licenses were already permitted under Canadian law, the new Bill C-13, ‘An Act respecting certain measures in response to COVID-19,’ would only speed up the process of issuing compulsory licenses for access to medical products and devices. On 28th March, the Federal Ministry of Health in Germany passed an Act which would allow the issuance of compulsory licenses under the existing Section 13(1) of the Patent Act.
India too, has a separate provision for compulsory licenses in case of ‘extreme urgency’ under Section 92. Given that around 21,842,738 have been affected till date all over the world, with 2,651,290 cases being reported in India alone, the pandemic outbreak should be well justified to qualify as one that is of ‘extreme urgency’, or a ‘national emergency.’ It is hoped that India too will soon make use of Section 92 to promote access to certain pharmaceutical products and processes in its fight against the deadly COVID-19. After all, extraordinary times call for extraordinary measures.
THE WAY AHEAD
The relevance of compulsory licenses in the fight against a global pandemic cannot be undermined. In the face of such a public health emergency, the criticisms against compulsory licenses seem to lose substance as the looming magnitude of the crisis takes over. This view seems to be supported by the world organisations as well.
The Director-General of the World Intellectual Property Organization, Francis Gurry, was reported stating that during an emergency, health and safety trumps everything. The World Health Organization has also remained in continual support of creating ‘a pool of rights to test medicines and vaccines, with free access or licensing on reasonable and affordable terms for all countries.’
The time has now come to stand united in the fight against a common enemy that has brought immense hardships to the human race. This pandemic has pervaded all borders, regardless of country, race, age, religion or gender. It has called upon humanity to realise that a diversified world must join together and that ‘knowledge’ knows no boundaries, especially when human lives are at stake.
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