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Judicious implementation of TRIPs
The doors should be opened for obligatory licensing enabling
the domestic enterprises in the production of patented drugs, says B K Keayla
in the concluding part of the article
New Section 84 A: Article 31(b) of the TRIPs Agreement
clearly stipulates that the member can allow the use of the subject matter of
a patent provided that:
(b) Such use, may only be permitted if, prior to such use, the proposed user
has made efforts to obtain authorization from the right holder on reasonable
commercial terms and conditions and that such efforts have not been successful
within a reasonable period of time.
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The concerns have been expressed because certain TRIPs
flexibilities concerning public interest and particularly the role of
the domestic enterprises have been ignored
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Based on the above stipulation in the TRIPs Agreement a large
number of countries (developed and developing) have made specific compulsory
licence provisions in their patent laws. As examples the provisions in the patent
laws of Brazil and China are reproduced as follows:
Brazil
The Patents Act of Brazil provides for compulsory licence for exploitation of
the patent as follows:
Article 73: An application for a compulsory licence
shall be drawn up by setting out the conditions offered to the patent owner.
On filing of the licence application, the patent owner shall be invited to submit
his comments within a period of 60 days, on expiry of which, in the absence
of a reply from the patent owner, the proposal shall be deemed accepted under
the conditions offered.
China
The Patents Act 1992 of China provides for Compulsory Licence for exploitation
of the patent as follows:
Article 51: Where any entity which is qualified to
exploit the invention or utility model has made requests for authorisation from
the patentee of an invention or utility model to exploit its or his patent on
reasonable terms and such efforts have not been successful within a reasonable
period of time, the Patent Office may, upon the application of that entity,
grant a compulsory licence to exploit the patent for invention or utility model.
The stipulation in Article 31(b) of TRIPs is a very important provision for
substantive role by the domestic enterprises. Even meeting of export demands
would be possible only when such a provision is there in the law as there should
be some enterprise already producing for domestic demand to meet the export
demand. As a matter of fact, it takes almost three to four years to develop
technology and stabilise the product. As such an enterprise already in production
has to be in the country to respond to export demand. In view of these consideration
and the example of other countries it is extremely important that provision
is made in a new Section 84A as follows:
Section 84A
When the proposed user has made efforts to obtain authorisation from the patentee
to use the patent on reasonable commercial terms and conditions and that such
efforts have not been successful within a period not exceeding 100 days, the
Controller shall at any time after the date of grant of patent grant compulsory
licence to the applicant on such terms and conditions as he may deem fit.
The commercial terms and conditions offered by the applicant shall be considered
reasonable by the Controller if royalty and other remuneration offered by him
are within five per cent of the annual sale turnover at net ex-factory sale
price.
It would be pertinent to point out that important international organisations
in South East Asia and American and European continents are perturbed over the
amendments proposed to the Patents Act 1970. Even important newspapers in their
editorials and articles by world known economists have commented upon the seriousness
of the situation which might emerge from the amended Patents Act affecting the
availability and affordability of medicines in the poor country who are dependent
upon exports from India.
The concerns have been expressed because certain TRIPs flexibilities concerning
public interest and particularly the role of the domestic enterprises have been
ignored. The concerns were raised by World Health Organisation Geneva, UNAIDS
Geneva, Special Envoys of the UN Secretary General for HIV/ AIDS in Asia and
the Pacific and in Africa, International Council of Medecins Sans Frontiers,
Geneva. Their concern can be addressed only when the suggested provision in
Section 84A is implemented.
Section 85 Sub-section (1)
The words ‘or that reasonable requirements of the public with respect to
the patented invention have not been satisfied or that the patented invention
is not available to the public at a reasonable affordable price’ may be
deleted. Compulsory licence granted to a domestic enterprise may be revoked
only for non-working. As for the other reasons the remedy lies in issuing more
compulsory licences and create competitive environment for easy availability
to the public at reasonably affordable prices of medicines.
There would be no justification to revoke the compulsory licence keeping in
view that the demand of pharmaceutical products at present is being met by thousands
of registered pharmaceutical manufacturers in India. The investment made by
the first compulsory licence holder should not be made to go waste.
The title of this section should also be changed. The word ‘patents’
may be changed to ‘licences’ as the section deals with compulsory
licences.
Section 90
Sub-section 1 clause (vi) provides for a shorter term for the compulsory licence.
No one would be interested to take licence for a shorter period and hence shorter
term may be deleted.
Sub-section (3): In sub-section (3) the words ‘relating
among other matters to the royalty and other remunerations, if any, payable
to the patentee’ occurring in the bracket of this sub-section may be deleted.
There is no question of paying royalty and any other remuneration to the patentee
as the imported article would have included these elements in the landed price.
If this amendment is not carried out it would allow the patent holder to claim
additional royalty on the imported product also.
Section 92
Circumstances of extreme urgency may be defined as notified Health Emergency
and Environmental Emergency relating to soil, water or air pollution.
Section 92 A
In sub-section (2) the word ‘solely’ occurring after the words ‘on
grant of a compulsory licence’ may be deleted. The retention of this word
can create unnecessary ambiguity.
Section 107 A
The word ‘solely’ occurring after ‘patented invention’ may
be deleted. The retention of this word can cause unnecessary ambiguity.
Price Control: TRIPs Agreement is silent about the
price control of patented products. The products protected under patents would
enjoy monopoly in the market place and would certainly command high prices.
Appropriate law should be strengthened to deal with the prices of the patented
products at least for the initial period of five years.
Conclusions
The originators of inventions should get their just reward by way of suitable
royalties and there should be no grudge in providing the same. The doors should
be opened for obligatory licensing involving the domestic enterprises in the
production of patented drugs. The suggestions made in this paper are within
the framework of the TRIPs Agreement. Judicious and careful implementation of
TRIPs is needed for its smooth application and balancing of rights and obligations
of the patent holder in a manner conducive to social and economic welfare as
stipulated in Article 7 of TRIPs Agreement.
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