Compulsory Licensing and COVID 19 – Getting nations closer or distant?

Compulsory Licensing and COVID 19 – Getting nations closer or distant?

Patents can give the owner a monopolistic right towards the invention thereby helping it lead the industry. However, there also is said to be a balancing aspect to this provision which enables the use of such invention by a third party without the consent of the patent owner. This aspect is present in the form of Compulsory Licensing (CL) of the patent. 

CL found its mention  in the Trade Related Aspect of Intellectual Property Rights (TRIPS) agreement. It states that such licenses should be issued in the interest of the public. Article 31 without using explicitly using the word ‘CL’ states that other use of the patent without the authorisation of the right holder can be done when “prior efforts to obtain authorisation from the patentee fails, there is an extreme urgency or for the non-commercial use for the benefit of the public”.

This agreement also allows the member states to frame their own grounds for grant of a compulsory license. It also mentions that in the event of national or public emergency and to hasten the process of getting a license, certain conditions or grounds can be waived off. Such grounds include the need to have had prior negotiations with the Patent owner. However, the CL makes it mandatory to provide adequate remuneration to the patent owner.

Section 84 of Patents Act

As per Indian law, Patents Act 1970 provides for CL in Section 84. Such license cannot be acquired until the required conditions are met. Section 84 provides that any person,  at any point of time, can apply for a license, three years after the patent has been granted to an invention. Such application is made to the Controller. However, such license can be granted if 

(a) that the reasonable requirements of the public with respect to the patented invention have not been satisfied, or

(b) that the patented invention is not available to the public at a reasonably affordable price, or

(c) that the patented invention is not worked in the territory of India.

The two sides of the same coin.

There are two schools of thoughts when it comes to compulsory license. One being that such a license is unfair to the patent owners who invest their skills and financial resources in their invention which is easily used by the third party on getting a compulsory license. The opposing school of thought states that CL makes it easier to get access and utilise such patents for the public’s welfare. Although monopoly is attached to a patent and it allows the companies to have an edge over the others, this latter school of thought is of the opinion that such patents through CL will enable the access to such inventions by those countries or governments who do not have adequate resources or are underdeveloped to carry out research or invest in Research and development of an invention. Such licenses can cater to the increasing demands in the time of need or emergencies especially related to public health. CL is termed to be a boon for the developing or underdeveloped countries who do not have the resources to invent or access to the essential medicines. 

The one with the former school of thought are usually the developed countries who fear that CL creates hindrances in innovation and demotivates the inventors to invent new technologies or products. Whereas the developing countries find it to be a crucial public policy tool. The 30th session of the WIPO Standing Committee on Law of Patents (SCP) which met in Geneva on 24-27 June 2019 had developed, developing and underdeveloped countries discuss the policy of CL.

The USA being a developed nation stated that ‘unrestrained application of compulsory license tends to undermine patent rights, reduce incentives to research and development and unfairly shift the burden of such research and development to foreign markets and discourage the introduction of new inventions.’The country continued to maintain that such license should be used in only limited circumstances and after making every effort to acquire license from the patent owner on reasonable commercial terms and conditions.

Canada being one of the developed countries spoke on their behalf. It was of the opinion that usage of CL should be limited to specific circumstances and excessive usage of it can detriment invention.

On the other hand, Uganda on behalf of the African group raised a concern pertaining to non availability of health and pharmaceutical essentials to the underdeveloped or some developing countries.It expressed that for a patent system to be effective; the fruits of innovation and technology should be available to the public. The concern of these developing countries was the license granting policies of the developed nations. The approach of these developed nations towards the policy on Exceptions and Limitations (E&L) to a patent is a matter of concern for the nations who wish to acquire CL for patents. 

India too was present in this session. It, as a developing country, stated that India has E&L policies which are compliant with the TRIPS agreement.  It further went on to mention that so far India has only granted a CL only in one case. The same happened in 2012, when a CL was granted to a generic company Nexavar for producing life saving kidney and cancer medicine. The license was acquired from Bayer who was selling this drug for USD 4121 for a monthly treatment whereas Nexavar priced the drug at Rs.9000 (USD 130). 

Compulsory Licensing and Pandemic

Since the most common ground for acquiring a CL is public health and emergency, this brings the focus point to the issue of medical emergencies. The policy of compulsory licensing was a successful tool for improving access to antiretroviral drugs during the epidemic of AIDS.  This brings attention to the current pandemic – COVID 19. The vaccine for the deadly COVID 19 is yet to be invented , how the policy of CL will unfold is anticipated by all. However, certain countries have already considered CL as a tool to fight this deadly virus. Israel initiated CL to import generic versions of lopinavir/ritonavir (AbbVie’s Kaletra).The health ministry of Israel considers this to be a possible drug to cure Coronavirus. Israel decided to import alternatives from India because AbbVie was unable to supply sufficient numbers of quantities. However AbbVie has decided to not enforce its patent in the wake of COVID 19.

As per the TRIPS agreement and the Doha Declaration, the countries are required to make provisions in their legislations in order to encompass the policy of CL for the patents in their country. On the same lines and in the light of the current pandemic, developed nations like Canada have come forward and amended their Patent Act to allow for a speedier process for grant of CL on the grounds of public health and emergency. This was done in consonance to their COVID 19 Emergency Response Act. This amendment will allow the government to issue a license for necessary innovations and negotiate on remuneration later. COVID-19 Emergency Response Act amended the Canadian Patent Act to allow for a speedier process for issuing a compulsory license on public health grounds. The amendment allows the government to issue a license for necessary innovations and to negotiate remuneration later. Lower house of Chile’s government has also released a resolution granting the use compulsory license since they declared that the coronavirus pandemic is a sufficient justification to grant CL for COVID 19 related inventions.

A way forward

Hence, although initially the developed countries had a different approach towards the grant of CL but the pandemic has brought a change in the outlook and attitude of these nations towards this policy.  In one way or another,public health emergencies have been a major ground for the grant of CL and the outbreak of this virus has once again awakened the duty to contribute towards the cure.

Certain times, when a license is applied on the grounds not related to emergency but regards to public health and welfare, the Patent owner can voluntarily license their patent after a good negotiation pertaining to their commercial and industrial interests with the applicants. This way it provides for a win-win situation for both the parties and leads to a good competitive advantage alongside. Hence, although CL is considered to be a boon by some and disadvantageous for others, it shall be applied and granted for, keeping in mind the legislative intent behind such provision. While it is used for its purpose, it also should be understood that one cannot have a free ride over the same for its own greed and ambitions.


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