Compulsory Licenses Under TRIPS · Compulsory Licenses Under TRIPS: Legal Requirements and...

Compulsory Licenses Under TRIPS:Legal Requirements and Demonstrated Deficiencies

Manisha A. Desai, Ph.D.Assistant General Patent Counsel

Eli Lilly and Company

Company Confidential © 2015 Eli Lilly and Company

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TRIPS Article 27.1

“[P]atents shall be available and patent rights

enjoyable without discrimination as to the place

of invention, the field of technology and whether

products are imported or locally produced”– “In the Panel's view, what was important was that in the rights

available under national law, that is to say those resulting from the

basic rights and any permissible exceptions to them, the forms of

discrimination referred to in Article 27.1 should not be present.”

– “It is quite plausible… that the TRIPS Agreement would want to

require governments to apply exceptions in a nondiscriminatory

manner, in order to ensure that governments do not succumb to

domestic pressures to limit exceptions to areas where right holders

tend to be foreign producers.”WTO Dispute Settlement Body, Canada – Patent Protection of Pharmaceutical Products (2000)

WT/DS114/R.

Manisha A. Desai, Ph.D.

13 October 2015Company Confidential © 2015 Eli Lilly and Company 2

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Article 27.1 Violations

• India

– “[T]he patent holder would nevertheless have to satisfy the

authorities under the Act as to why the patented invention was

not being manufactured in India keeping in view Section 83 of

the [Indian Patents] Act.” Bayer Corporation v. Union of India, WP-1323-Jud (2014)

• Brazil

– “The following also shall occasion a compulsory license: I. non-

exploitation of the object of the patent within the Brazilian

territory for failure to manufacture or incomplete manufacture of

the product, or also failure to make full use of the patented

process, except cases where this is not economically feasible,

when importation shall be permitted.” Article 68(1), Law no. 10.196/01



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TRIPS Article 31

“Where the law of a Member allows for other

use* of the subject matter of a patent without

the authorization of the right holder,

including use by the government or third

parties authorized by the government, the

following provisions shall be respected:”

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* “Other use” refers to use other than that allowed under Article 30”


13 October 2015Company Confidential © 2015 Eli Lilly and Company

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Article 31(b)

“the proposed user has made efforts to obtain authorization from the right holder… and that such efforts have not been successful within a reasonable period of time…. In the case of public non-commercial use, …the right holder shall be informed promptly.”

– India• Compulsory License (CL) to Natco for Bayer’s Nexavar® in 2012

• Natco application for CL 6 months after a single letter to Bayer

– Indonesia • Presidential Decrees granted CLs for “government use”

• Government argued this allowed it to waive Article 31(b)

5Manisha A. Desai, Ph.D.


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Article 31(c)

“the scope and duration of such use shall be limited

to the purpose for which it was authorized….”

– India

• “In respect of medicines the adequate extent test has to be 100%

i.e. to the fullest extent. Medicine has to be made available to

every patient and this cannot be deprived/scarified at the altar of

rights of patent holder.”

– Indonesia

• Eleven CL grants, all for the duration of the patent term.

– Ecuador

• Nine CL grants, all for the duration of the patent term.



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Article 31(f)

“any such use shall be authorized predominantly for

the supply of the domestic market of the Member

authorizing such use.”

– India

• 2012 CL Order was limited to the “Territory of India”

• Bayer forced to seek injunction to prevent export of product

• Delhi High Court ordered Customs to confiscate exports

• Any exports for “experimentation or generation of clinical trial

data” would be permitted, subject to petition by licensee



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Article 31(g)

“authorization for such use shall be liable… to be terminated if and when the circumstances which led to it cease to exist and are unlikely to recur.”

– Indonesia

• National law allowed patentee to request revocation of a CL grant

• Indonesia argued the Presidential Decrees of 2004, 2007, and 2012 were “government use” grants

• National law did not include provision to request revocation of “government use” grants

• Article 31 preamble requires provisions to be complied with, regardless whether the use is by the government or by third parties



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Article 31(i)

“authorization of such use shall be subject to judicial

review or other independent review by a distinct

higher authority in that Member.”

– Indonesia

• National law creates distinction between “compulsory license”

and “government use”

• Law allows independent judicial review of a “compulsory license”

• No mechanism for judicial review of “government use”

• Only the amount of remuneration may be subject to review

• Article 31 applies to all such uses, “including use by the

government”



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Does the US Grant CLs?

• Very limited provisions in US law:– Inventions relating to nuclear material or atomic energy

– Mandatory licensing under The Clean Air Act

• Bayh-Dole “march-in” rights are voluntarily agreed to in return for federal funding

• 28 USC 1498 allows the government to stand in place of an infringement defendant

• Apple v Samsung (Fed Cir 2015):– “Samsung is correct – the public often benefits from healthy

competition. However, the public generally does not benefit when that competition comes at the expense of a patentee’s investment-backed property right.”



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MUITO OBRIGADA!




Assistant General Patent Counsel

Eli Lilly and Company

www.lilly.com

http://www.lilly.com/

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Hari SubramaniamSubramaniam & AssociatesNew DelhiIndiaFax: (+91 11) 2922 6005/2922 6012E-mail: [email protected]

AIPPI- Pharma 3 Panel Discussion

PUBLIC-PRIVATE CONFLICT

Compulsory Licenses

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RATIONALE

• Indian Patent system based on quid pro

quo

• Monopoly rights in return for full

disclosure as well as making

technology available in India

• Therefore commercial working required

• Abuse of monopoly not permitted.

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WHAT IS ABUSE

Section 83

• Not making technology available.

• Monopoly over imports.

• Refusing Licenses even when demand

is not met.

• Unreasonable terms in Licenses.

• Unreasonable price.

• Groundless threats.

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APPLICABLE

PROVISIONS OF LAW

• An application for CL may be made by “a

person interested” if:

• Reasonable requirements of the public with

respect to the patented invention not met.

• Patented invention is not available to the

public at a reasonably affordable price.

• The invention is not worked within the

territory of India

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ADEQUATE EXTENT

• What is adequate is case specific.

• No uniform rule.

• Is the demand met.

• Is the requirement for export satisfied.

• Is there a long waiting list.

• There may be other factors.

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REASONABLE TERMS AND PRICE

• What is reasonable depends upon what a

Licensee is prepared to pay.

• Reasonable price is case specific…. does not

mean lowest price.

• Innovator’s cost will be always higher than an

infringers.

• Must be judged in the context of what a

customer is willing to pay.

(Cathro’s Appln (1934) RPC 75 at 82).

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Fullest extent that is reasonably practicable

• Again depends upon a particular case.

• Could mean maximum possible rate of

production to meet the demand.

• If there is no demand the question of

public requirement does not arise.

(Kamborian’s patent (1961) RPC 403 at 405

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Matters to be considered

• Nature of the invention

• Time elapsed since grant

• Measures already taken by the Patentee

• Ability of the potential licensee to meet

the demand at the agreed price.

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• Potential licensee’s capacity to take risk

with respect to capital

• Whether the potential licensee had

made any efforts to obtain license from

the Patentee.

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Procedure

• Potential licensee to make out a prima

facie case

• Compulsory license is not automatic

• Copies to be served on patentee

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Effect of not working even after

compulsory license

• After two years from grant of

compulsory license if the reasonable

requirements of public are not met, the

Government may apply for revocation

of the patent

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BMS vs BDR Pharma

• Compuslory license was not granted in respect of drugs ixabepilone and Dasatinib (Sprycel)

• Earlier BMS was granted injunction against Natco

• Basically because BDR did not first make reasonable efforts for reasonable time (six months) to obtain license

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Lee Pharma vs AstraZeneca

• Compuslory license Applications against

drugs – Onglyza and Kombiglyze.

• Prima facie Patent Office not satisfied with

Lee Pharma’s capacity to manufacture,

meet the demand or reduce price

significantly.

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Natco vs. Bayer

• Compulsory license

• Bayer’s patented drug cost US $ 5000 per month.

• Life saving ant-cancer drug

• No manufacture in India.

• All supply by import, even then only 2% of demand met

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Natco vs. Bayer

• Natco offered to manufacture in India and supply at about US $175 per month.

• Bayer could not justify its cost – that it was reasonable

• Patent Office granted Natco compulsory license on the ground that reasonable requirements of the public was not met and in any case, the price was not reasonable.

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Nandana Indananda

Partner, Intellectual Property Department

Tilleke & Gibbins International Ltd.

Pharma Session 3Technology Transfer: Public vs.

Private InterestsCompulsory License Regime in

Thailand

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Thailand and Access to Medicine

►The National Health Security Act of 2002 mandates the Thai Government to achieve universal access to essential medicines.

►It was reported that about 500,000 people were living with HIV/AIDS.

►In 2002, the Thai Government spent more than USD 125 Million to treat HIV/AIDS patients.

►Since October 1, 2003, the Thai Government committed to providing universal access to antiretroviral treatment for all Thai HIV/AIDS patients.

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The Grant of Compulsory License in Thailand in 2006-2007

Medicines Uses Title of InventionApplication

Date

Patent holder in

Thailand

Compulsory

Licensing Period

Efavirenz First-line treatment

for HIV/AIDS (to

avoid severe adverse

reactions from

Nevirapine-based

regimen)

Benzoxaxinone, HIV

reverse transcriptase

inhibitor

July 30, 1993 Merck Sharp and

Dohme Corp.

Nov 29, 2006 to

Dec 31, 2011

Lopinavir +

Ritonavir

Second-line

treatment for

HIV/AIDS

Retroviral protease

inhibitor

Dec 04, 1996 Abbott Laboratories

Limited

Jan 24, 2007 to

Dec 31, 2011

Clopidrogel Prophylaxis of

coronary artery

obstruction

Polymorphic form of

clopidrogel hydrogen

sulfate

Jun 10, 1999 Sanofi-Aventis

Limited

Jan 25, 2007

until the patent

is expired or

until the

medicine is not

required to be

used.

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The Grant of Compulsory License in Thailand in 2008

Medicines Uses Title of InventionApplication

Date

Patent holder in

Thailand

Compulsory

Licensing

Period

Docetaxel Treatment of

breast, lung,

prostate and

stomach (GIST)

cancers

Process for the preparation of

4-acetoxy-2-benzoyloxy-5,

20-epoxy-1,7-10-

trihydroxy-9-oxo-tax-11-en-

13-yl (2R,3S)-3-tert-butoxy-

carbonylamino-2-hydroxy-3-

phenylpropinoate trihydrate

July 7, 1995 Sanofi-Aventis

Limited

Jan 4, 2008 until

the patent is

expired or until

the medicine is

not required to

be used.

Letrozole Treatment of

breast cancer

N/A N/A N/A Jan 4, 2008 until

the patent is

expired or until

the medicine is

not required to

be used.

Erlotinib Treatment of lung

cancer

Treatment with

irinotecan (CPT-11)

and an EGFR inhibitor

May 31, 2005 Roche Jan 4, 2008 until

the patent is

expired or until

the medicine is

not required to

be used.

Imatinib Treatment of

chronic myeloid

leukemia and GIST

Pharmaceutical

compositions

comprising imatinib

and a release

May 9, 2006 Novartis Jan 4, 2008 until

the patent is

expired or until

the medicine is

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Effects and Consequences after CL

►Huge Price Reduction

►Appraisal from International Organizations (WHO, UNAIDS) NGOs (Clinton Foundation, Oxfam, TWN) Media, Health Academics

►Thailand was put on Priority Watch List (PWL) by USTR

►Withdrawal of new medicine registration applications by Abbot

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Facts You May Need to Know (1)

►There are about 160 drug factories in Thailand, all of which are local. Drug factories owned by multinational companies were moved from Thailand more than 20 years ago.

►Before the declaration of CL, the Ministry of Public Health (MOPH) did negotiate with pharmaceutical companies which held importing license (sales companies) not companies which held patents (mother companies who actually held the patents).

►The objective of negotiation was to ask such companies to reduce the sales prices, not to obtain patent authorization.

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►Government Pharmaceutical Organization (GPO) imported some drugs from India. Some drugs cannot be imported because no marketing certificate has been approved.

►GPO is the state-owned enterprise in charge of manufacturing drugs mainly for domestic supply.

►GPO does business without the aim to maximize profit. In 2007, GPO’ total asset was USD 287,292,270 and total income was USD 38,078,182.

►According to GPO website, Secretary General of MOPH and Director General of Department of Decease Control who declared the CL were board members of GPO. In addition, the Chairman of the Committee on Price Negotiation was the Chairman of the Board of Directors of the GPO.

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►There were no patent registration numbers or patent application numbers referred to in the CL Declaration. Only generic names and trade names of the drugs were specified.

►Thailand’s Compulsory License were declared by MOPH and Department of Disease Control, not by the Director General of the Department of Intellectual Property.

►MOPH declared the durations of CL by themselves. If not declared otherwise, the duration of CL was between 5-18 years (average 10.66 years)

►MOPH did not use the patent by themselves. Rather, Government Pharmaceutical Organization (GPO) was appointed to exploit the patent rights.

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►Ministry of Public Health declared the remuneration by themselves, which typically was 0.5 percent of the sales price (not the profit, if any) GPO received.

►After CL declaration, MOPH informed DG of DIP its CL Declaration. MOPH did not offer any remuneration and conditions of patent exploitation to DG of DIP.

►MOPH invited pharmaceutical companies (importers) to negotiate the remuneration. (It was likely that the companies did not attend the negotiation.)

►DIP never invited the patentees to negotiate the remuneration and conditions of patent exploitation.

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►Director General of the Department of Intellectual Property under the Ministry of Commerce has never issued the Compulsory License Certificate

►It has never been officially reported whether GPO gained profit for this action.

►It has never been officially reported whether MOPH or GPO paid any remuneration to the patentees.

►The Patentees did not appeal the decision to declare CL to any competent authority.

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Conditions for CL in Case of Government Use under TRIPS (1)

►No requirement of effort to obtain authorization from the right holder on reasonable commercial terms and conditions

►Notification

As soon as reasonably practical (National emergency or other circumstance of extreme urgency)

Promptly informed (Public non-commercial use)

►Scope and duration of such use shall be limited to the purpose for which it was authorized.

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►Non exclusive

►Non assignable

►For the supply of domestic market

►Authorization shall be liable to be terminated when circumstances which led to it cease to exist and are unlikely to recur

►Competent authority shall have the authority to review the continued existence of these circumstances

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►The right holder shall be paid adequate remuneration in the circumstances of each case, taking into account the economic value of the authorization

►The legal validity of any decision relating to the authorization of such use shall be subject to judicial review or other independent review by a distinct higher authority

►Any decision relating to the remuneration provided in respect of such use shall be subject to judicial review or other independent review by a distinct higher authority

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Conditions for CL in Case of Public Non Commercial Use in Thailand

►Any Ministry, Bureau or Department may, by themselves or through others, exercise the patentee’s rights

►The Patentee shall be notified in writing without delay.

►The Government shall submit its offer setting forth the amount of remuneration and condition for the exploitation of patent to the Director of Department of Intellectual Property

►The royalty rate shall be as agreed upon by the ministry or bureau or department and the patentee or his licensee, and the provisions of Section 50

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What is Section 50 of Thai Patent Act?

►Section 50 of the Patent Act is the general provision regarding the authority the DG of DIP to issue CL.

►It empowers the DG to

Decide whether CL should be granted

Specify the amount of remuneration

Specify scope, duration, condition or restriction of use

Issue Compulsory License Certificate which is subject to review of Board of Patent and then IP Court

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What are the legal issues? (1)

►It is not clear how far Section 50 applies.

►Can the MOPH specify the scope, duration and condition of use by themselves? Or it is the authority of the DG.

►After CL declaration by MOPH, but before the issuance of CL certificate by DGDIP, can MOPH start using the patent right?

►Is CL certificate really needed in case of public commercial use? (Note that Thai law states that in case of national emergency, CL certificate is not needed)

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What are the legal issues? (2)

►If CL certificate is not necessary, does it mean that Thai law does not provide legal mechanism to appeal the decision to issue CL and to review the amount of remuneration and scope or condition of CL, and thus is contrary to TRIPs?

►Does Thai law provide the legal mechanism to review the continued use of CL where the circumstances change?

►Is the duration of CL (average 10.66 years) justified?►Is the 0.5 percent remuneration which is calculated from the

sales price GPO received irrespective of its profit gained justified?►If GPO or generic companies gained more profit than the

patentee, is CL still justified?►If GPO gained profit, does the fact that ones who involves in CL

declaration were members of GPO Board of Directors show conflict of interests?

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Lessons Learnt from Thailand

►CL is politically, economically and socially sensitive.

►CL is a complicated process which needs transparency and collaboration among the concerned people.

►Clear legal mechanisms to bring justice is necessary

Martinez & Associados

Intellectual Property Law Firm

© Martinez & Associados – AIPLA Mid-Winter Institute - 2015

COMPULSORY LICENSING

WHY THE BRAZILIAN

GOVERNMENT CAN THREATEN

TO "BREAK" YOUR PATENT




1883 - Paris Convention

(2) Each country of the Union shall have

the right to take legislative measures

providing for the grant of compulsory

licenses to prevent the abuses which

might result from the exercise of the

exclusive rights conferred by the patent,

for example, failure to work.




1883 - Paris Convention

(4) A compulsory license may not be

applied for on the ground of failure to

work or insufficient working before the

expiration of a period of four years from

the date of filing of the patent application

or three years from the date of the grant

of the patent, whichever period expires

last; it shall be refused if the patentee

justifies his inaction by legitimate

reasons.




1994 – TRIPs Agreement

Members may, in formulating or amending

their laws and regulations, adopt

measures necessary to protect public

health and nutrition, and to promote

public interest in sectors of vital

importance to their socioeconomic and

technological development, provided that

such measures are consistent with the

provisions of this.




2001- Doha Declaration on the TRIPS

Agreement and Public Health

5(b) Each member has the right to grant

compulsory licenses and the freedom to

determine the grounds upon which such

licenses are granted.






5(c) Each member has the right to

determine what constitutes a national

emergency or other circumstances of

extreme urgency, it being understood that

public health crises, including those

relating to HIV/AIDS, tuberculosis, malaria

and other epidemics, can represent a

national emergency or other

circumstances of extreme urgency

granted.




2001- Doha Declaration on the TRIPS Agreement

and Public Health

6. We recognize that WTO members with

insufficient or no manufacturing capacities in the

pharmaceutical sector could face difficulties in

making effective use of compulsory licensing

under the TRIPS Agreement. We instruct the

Council for TRIPS to find an expeditious solution to

this problem and to report to the General Council

before the end of 2002. .






6. … We also agree that the least-developed

country members will not be obliged, with

respect to pharmaceutical products, to

implement or apply Sections 5 and 7 of Part II

of the TRIPS Agreement or to enforce rights

provided for under these Sections until 1

January 2016, …




1988 - Brazilian Constitution

Art. 5 XXIX - the law shall ensure the authors

of industrial inventions of a temporary privilege

for their use, as well as protection of industrial

creations, property of trademarks, names of

companies and other distinctive signs, taking

into consideration the social interest and the

technological and economic development of the

country.”





A patent is an exclusive right

a) Object of the protection is the creation

of a new solution to a technical problem;

b) Privilege is essentially temporary;

c) Granted rights are conditioned to the

good use of the patent.





Three essential limitations

(a) Privilege cannot be abused;

(b) Patent is subject to the public interest;

(c) The limitation on the free competition

granted compels the exclusive right to be

interpreted in a restricted sense.




1997 - Brazilian IP Law

3 Types of compulsory licenses:

(a) Public interest

(b) Lack or insufficient use or work

(c) Closely dependent patents




Public Interest

Decree 3,365/41 - Article 5

(a) Public assistance in case of natural

disasters

(b) Public health

(c) National emergency




Lack or Insufficient Use

(a) Independent of public interest issues

(b) Applicable to any patent not being

worked by patentee or licensee




Closely Dependent Patents

(a) Use of one patent depends from another

(b) Object of second patent constitutes a

substantial technical progress with regard to

the earlier patent

(c) Patentees fail to reach agreement




1997 - Brazilian IP Law - Articles 68 to 72

(a) Patentee exercise his rights in an

abusive manner or engages in abuse of

economic power

(b) Does not work or insufficiently works

the patent

(c) Closely related patents




1997 - Brazilian IP Law – Article 73

(a) Notify patentee

(b) Applicant claiming abuse of patent

rights or economic power has the burden

of proof

(c) The BRPTO shall discuss the request

should the application be contested

(d) Government agencies may assist.





(a) BRPTO shall decide the grant and the

conditions of the compulsory license

within a period of 60 (sixty) days





(a) Licensee must begin use of the patent

within a period of 1 (one) year from the

grant of the license and an interruption

for the same period of time is allowed




Brazilian IP Law does not provide a

specific procedure for requesting a

compulsory license and the general rules

of Article 73 of the IP Law only determine

as follows:

73. The request for a compulsory license

shall be formulated indicating the

conditions offered to patentee.




(a) Establishing public interest or emergency,

ascertaining possible lack of use and

determining a possible relation between

patents

(b) Declaring a situation of public interest or

emergency, establishing lack of use or

insufficient use or determining a dependency

between patents




(c) Public offer or bid for the license,

except when a third party requested the

license

(d) Fixing or arbitrating the value of the

royalties

(e) Granting the license;

(f) Recording the compulsory license




Paraphrasing Forrest Gump:

“This is what I have to say about it”

Thank you.

Compulsory Licenses Under TRIPS · Compulsory Licenses Under TRIPS: Legal Requirements and...

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