Compulsory Licensing law under TRIPS Regime

- Yashraj Bardhan*

Introduction

The Intellectual Property Rights has emerged as one of the most important kind of property endowed with adequate protection under the law of the national as well as international legal systems. Given the significance of innovations, discoveries, and creativity in human life and the civilization, IPRs deserve as the most revered and sacred rights to be jealously protected.1

The importance attached to the IPRs is also reflected in the Agreement concluded by International community in the name of Trade Related Intellectual Property Rights (TRIPS) which was separately entered amongst Member nations of WTO and the developed, developing and the least developed countries were given different time - frames to make necessary amendments in their national legal system for IPRs protection to come at par with the TRIPS Agreement.2

Yet important aspect which has always drawn attention is that it must be for the welfare and development of human being and the civilization and not otherwise. No right is absolute and so are the Patent3/IPR rights. It has to be borne in mind that such rights are safeguarded and encouraged for the betterment of the 1*B.A. LL.B (Hons.), NLIU, Bhopal; Consultant Law, Infrastructure Development Authority, Bihar, Patna. (E-mail-yashrajbardhan@sify.com; yashrajbardhan.india@gmail.com ). [Views expressed are personal]? Paris Convention for the protection of industrial property, 1883 was the first convention for the protection of Intellectual Property. This Convention and Berne Convention for the protection of Literary and Artistic Works, 1886 are the earliest and they focus primarily on preventing nations from enacting discriminatory Intellectual Property laws. 2 The law of patents has also become an important discipline of international trade and commerce due to great advancement in science and technology, revolutionary changes in information technology and the introduction / re introduction of product patent. (See www.legalserviceindia.com/article/1414-Patents-&-Its -Effects-In-India.html )3 Patenting is one of the rights under IPRs. Grant of patent rights confers an exclusive right upon the patent holder to make, use, sell and distribute the patented product or the process. He can exclude all others from using that invention in the particular jurisdiction in which he has got the patent. Patent rights are a property and the patentee becomes the owner of it.

1

human life and society. Therefore, the provisions such as compulsory licensing4 find place in the legal system relating to IPR law which is one of the tools to mitigate the exclusive rights conferred upon patent holder in case of pharmaceutical industry.

TRIPS does not use the word compulsory licensing, instead it refers to it as ‘Other Use without Authorization of the Right Holder’ under Article 31 Article 75 and 86 also describe, in principle, about compulsory licensing conditions. TRIPS led to controversy regarding use of compulsory licensing for public health and to serve socio – economic purpose as original TRIPS in spite of these provisions, left many ambiguities as to when and how WTO members may circumvent IPRs to gain access to essential drugs or whether holders of IPRs could prevent subsequent import or export of their product once they have placed it in the market.

Use of compulsory licensing is of utmost importance for pharmaceutical products as medicines are not available to the poorer section in various countries due to patent protection enjoyed by MNCs. This is especially true in case of anti - AIDS drugs.7 The premise of such provisions has been the need to bring a certain degree of equity in the system by making products, particularly, pharmaceuticals accessible and affordable to large population in developing countries.8

The objective of this paper is to analyze the concerns for cheap medicines and the amendment in the Indian Patent law to make the same compliant with the TRIPS provisions. There has been strong belief that due to the amendments in our National Law of patents, drug prices would inflate as now the product patent system has been introduced which would empower the

4 CL is an authorization given by a national authority to a person, without or against the consent of the title holder, for the exploitation of a subject matter protected under patent. 5 Article 7 states that protection of intellectual property should be for the purpose of promoting innovation in the manner conducive to social and economic welfare, and to balance of rights and obligations. 6Article 8 states that IPRs may be suspended for the purpose of public health and socio-economic need. 7 Janodia, M. D.; Rao, J.V.; Udupa. N.; “Compulsory Licensing: To what Extent it is practicable?”, Current Science, Vol. 91, No. 8, 998. The Article was accessed from INTERNET from www.ias.ac.in/currsci/oct252006/998.pdf as accessed in August, 20098 Harshita Mathur, “Compulsory Licensing under Section 92A: Issues and Concerns”, Journal of Intellectual Property Rights, Vol. 13, September 2008, 464

2

patent holder of a particular drug/medicine to monopolize the market and to dictate the price. Therefore, an attempt has been made in this paper to examine the possibilities under the current legal regime of patents/IPRs with special reference to the TRIPS Agreement for the use of Compulsory Licensing provisions to safeguard public health.

Historical Background

The Intellectual Property protection regime had been in practice in different countries in varying levels of protection. There appeared a need to harmonize this old law to facilitate international trade and the free flow of technology. This was necessary in order to obtain sufficient protection in other countries of the world in view of the disparity in laws.

This was realized for the first time in the year 1873 when many countries refused to display their inventions in an exhibition called for this purpose held in Vienna. It followed deliberation, conference and finally Paris Convention for protection of Industrial Property, 1883 came into existence. Thereafter, Berne Convention for the protection of Literary and Artistic Works, 1886 and Rome Convention for Artists and Performers Rights, 1961 came into existence to protect IPRs at International Level.

Later on, one International Organization namely World Intellectual Property Organization (WIPO) also came into existence in Stockholm in the year 1967 when last revision of Paris Convention took place. This Organization has the responsibility to administer and promote IPR on an international level.9 However, 9 T.V.Malvika, INTELLECTUAL PROPERTY RIGHTS, Magazine, as accessed on

12/09/2009 on INTERNET site- http://www.tutorial.web4all.in/archives/fsug~bangalre/2006-Aril/000754.html and also available on

3

Uruguay Round of Negotiations culminating into World Trade Organization came out with Agreement on Trade Relate Intellectual Property Rights as TRIPS in the year 1994 which worked to merge Intellectual Property Rights with International Trade.10

The concept of compulsory licensing is not new and its history dates back to the Statute of Monopolies in 1623 in England where it was evolved as means to work locally a patented product. It was also included in the Patent Act of 1883 in England which provided for the grant of the patent in case where it was not being used in public interest.11

India's laws on IPRs, specially the Patents, date back to 1856 which was again re-enacted in 1859 in line with British Law as amended in 1852. Subsequently, several changes took place in this field and finally the Indian Patents and Designs Act 1911 was enacted. After independence, it was realized that Enactment of 1911 was not in the interest of Indian inventors, an amended and new Act namely Indian Patents Act, 1970 was enacted12 wherein also Compulsory licensing provision was added.13 This post independence law on patents was the first comprehensive patent rights regime in our country.

Indian Patents Act, 1970 and Compulsory Licensing Provisions

In Indian Patents Act, 1970, after three consecutive amendments, there has been lots of changes in the provisions relating to compulsory licensing. Sections 82 to 94 under Chapter XVI provide for working of patents, compulsory licenses and

www.thehindu.com/thehindu/mag/2006/04/09/index.htm 10 D. H Kim.; Research Guide on TRIPS and Compulsory Licensing: Access to Innovative Pharmaceuticals for Least Developed Countries, as accessed from INTERNET site:- www.nyulawglobal.org/globalex/TRIPS_Compulsory_ Licensing.htm in July, 2009

11 W.R.Cornish, Intellectual Property: Patents, Copyrights, Trademarks and Allied Rights, p. 291, 4th Edn., Sweet & Maxwell, London, (1999)

12 The 1970 Act was enacted upon the recommendations of Tek Chand Patent Enquiry Committee (1948-1950) and the Ayangar Committee (959). The Patents Act, 1970 abolished the product patent for food, pharmaceuticals and chemicals and restricted the same only to process patent. Provision of ‘license of rights’ let the inventions being freely used in public interest.

13 Supra Note 94

revocation. General principles applicable to patented inventions have been detailed under Section 8314. Section 84 dealing with Compulsory Licensing states that anyone may be granted compulsory license under the established process to exploit a patent if "a patent is not worked in India for three years after its grant...” on fulfillment of three conditions as: “'reasonable requirements of the public' are not satisfied" , "the patented invention is not available to the public at a 'reasonably affordable price'...." and “the patented invention is not worked in the territory of India”. To determine reasonable requirements of public, it provides as,

a) The development or establishment of trade and industry is being prejudiced in India ;

b) The demand is not being met to an adequate extent or on a reasonable terms from manufacture in India;

c) The establishment or development of commercial activities in India is prejudiced;

d) A market for the export of the patented article manufactured in India is not being supplied or developed

Apart from the above, there are other similar situations for grant of compulsory licensing. The Controller shall have to take into account the nature of invention; the time elapsed since the sealing of the patent, the ability of the applicant to work the invention to the public advantage, capacity of the applicant, applicant’s efforts. Section 88 lays down the powers of Controller in granting CLs and Section 89 states the general purposes for such grant as follows:-

i. That patented inventions are worked on a commercial scale in the territory of India without undue delay and to the fullest extent that is reasonably practicable;

ii. That the interests of any person for the time being working or developing an invention in the territory of

14 This section lays emphasis on (i) encouragement of invention, not monopoly of patentee, (ii) Protection and enforcement of patent rights for dissemination of knowledge conducive to social and economic welfare and to balance of rights and obligations, (iii) to promote public interest and to prevent ways and means impeding public health and nutrition, (iv) benefits of patented invention should reach to public at reasonably affordable prices.

5

India under the protection of a patent are not unfairly prejudiced.

Section 90 lays down the terms and conditions for such grant regarding payment of royalty, remuneration to the patent holder, fullest utilization of patent with reasonable profits, patented articles are available to public at reasonable price, non-exclusive and non-assignable nature of license, predominant purpose of supply in Indian market etc. Now Section 92A allows exportation of patented products under compulsory licensing. In case, the Central Government feels that the purpose behind grant of CL has been achieved, it may terminate the same under Section 94.

The 1970 Act had been passed under Indira Gandhi government to permit greater access of medicines at lower rates to the poor in the country. This objective was achieve also as the permissibility of process patent only allowed Indian companies to flourish by producing generic version of medicines and making them available at lower costs. However, in pursuance of obligations under international organization such as WTO and TRIPS Agreement, India had to bring the amendments in its law which was done phase wise.15

Recent DevelopmentsAfter the coming into existence of the World Trade

Organization and 1994 Agreement on Trade Related Aspects of Property Rights, all the signatories are obliged to grant product patents to pharmaceuticals products and also to incorporate other provisions of international Agreement in national law. Accordingly, the Indian Parliament brought three amendments to the Patent Act, 1970.

The Patent (1st Amendment) Act, 1999 provided for Exclusive Marketing Rights with retrospective effect since 1st January, 1995.

The Patents (2nd Amendment) Act 2002 brought some wider changes as follows:-

15 Andrade C., Shah N., Chandra S, “The new patent regime: Implications for patients in India, Indian J. Psychiatry”, 2007; 49: 56 - 9

6

i. Definition of invention now read as a new product or process involving an inventive step and capable of industrial application;

ii. Microorganisms were made applicable;iii. Term of patent was extended to 20 years from the

date of application;iv. ‘Licenses of Rights’ provision were deleted;v. Reversal of burden of proof under Section 104A was

inserted;vi. Research exemptions were incorporated under Section

107A;vii. Sub-section (g)16 of Section 3 was deleted widening

the scope of patentability of testing methods or processes.

The Patents (3rd Amendment) Act, 2005 ushered India to the product patent regime as required by TRIPS which led to much rancor amongst academicians, pharmaceutical industry and social activists. This Amendment has many new provisions that will shape the country's pharmaceutical industry in a new frame. The amended Act's key provisions to strengthen the regime in accordance with the TRIPS and the Doha Round of year 2001 and it retained the Compulsory Licensing provisions under Sections 84 to 94, Chapter XVI.

India's compulsory licensing provision gets more importance in view of the increase in drug price and their unaffordability in poorer and developing countries. As a result of new system being introduced by the TRIPS Agreement, there has been increase in the price of medicines affecting people at large which have been evidenced in the United Nations’ Programs.17

16 “a method or process of testing applicable during the process of manufacture for rendering the machine, apparatus, or other equipment more efficient or for the improvement or restoration of the existing machine, apparatus or other equipment or for improvement or control of manufacture”17 Brook K. Baker, “Arthritic Flexibilities For Accessing Medicines: Analysis of WTO Action Regarding Paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public Health in Indiana International & Competitive Law Review”, 14 Ind. Int’l & Comp. L. Rev. 613, page 2, 2004

7

The retention of the Compulsory Licensing provisions has been subject of much criticism and appraisal from the developed/industrialized and developing/least developed countries respectively. However, the developing and the least developed countries have hailed such provisions as it would be in direction of protecting the interest and concerns of the poor’s health and making life saving and other crucial drugs available to the masses at a reasonable and affordable price.

Under such circumstances, the question arises as to the permissibility of the provision for compulsory licensing under the TRIPS Agreement and the Doha Declaration which would be analyzed subsequently.

TRIPS Agreement and Compulsory Licensing TRIPS Agreement indicates that IPRs need to be balanced

against other important interests, such as public health.18 Article 31 of the TRIPS Agreement19 provides for the compulsory licensing 18 Martin, G.; Sorenson, C.; Faunce, T.; “Balancing Intellectual Monopoly

Privileges and the need for essential medicines; Globalization and Health”, 20073:4 as available on website :- www.globalizationandhealth.com/content/3/1/4

19Article 31:- Other Use without Authorization of the Right Holder

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:

    (a) Authorization of such use shall be considered on its individual merits; (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. This requirement may be waived by a Member in the case of national emergency or other circumstances of extreme urgency or in cases of public non-commercial use. In situations of national emergency or other circumstances of extreme urgency, the right holder shall, nevertheless, be notified as soon as reasonably practicable. In the case of public non-commercial use, where the government or contractor, without making a patent search, knows or has demonstrable grounds to know that a valid patent is or will be used by or for the government, the right holder shall be informed promptly;     (c) the scope and duration of such use shall be limited to the purpose for which it was authorized, and in the case of semi-conductor technology shall only be for public non-commercial use or to remedy a practice determined after judicial or administrative process to be anti-competitive;     (d) such use shall be non-exclusive;     (e) such use shall be non-assignable, except with that part of the enterprise or goodwill which enjoys such use;     (f) any such use shall be authorized predominantly for the supply of the domestic market of the

8

indirectly, not using the term expressly. “Other use” as referred in this Article refers to use other than that allowed under Article 30.20 There are grounds set forth under this Article which justify the grant of compulsory licensing rights for the exploitation of the patented rights.21

The important grounds22 for granting CLs are as follows:-

i. Emergency and extreme urgency;

Member authorizing such use;     (g) Authorization for such use shall be liable, subject to adequate protection of the legitimate interests of the persons so authorized, to be terminated if and when the circumstances which led to it cease to exist and are unlikely to recur. The competent authority shall have the authority to review, upon motivated request, the continued existence of these circumstances;     (h) the right holder shall be paid adequate remuneration in the circumstances of each case, taking into account the economic value of the authorization;     (i) 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 in that Member; (j) 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 in that Member;    (k) Members are not obliged to apply the conditions set forth in subparagraphs (b) and (f) where such use is permitted to remedy a practice determined after judicial or administrative process to be anti-competitive. The need to correct anti-competitive practices may be taken into account in determining the amount of remuneration in such cases. Competent authorities shall have the authority to refuse termination of authorization if and when the conditions which led to such authorization are likely to recur;   (l) where such use is authorized to permit the exploitation of a patent (“the second patent”) which cannot be exploited without infringing another patent (“the first patent”),

the following additional conditions shall apply:    (i) the invention claimed in the second patent shall involve an important technical advance of considerable economic significance in relation to the invention claimed in the first patent;     (ii) the owner of the first patent shall be entitled to a cross-license on reasonable terms to use the invention claimed in the second patent; and   (iii) the use authorized in respect of the first patent shall be non-assignable except with the assignment of the second patent.

20 Article 30 reads as:- Exceptions to Rights Conferred

Members may provide limited exceptions to the exclusive rights conferred by a patent, provided that such exceptions do not unreasonably conflict with a normal exploitation of the patent and do not unreasonably prejudice the legitimate interests of the patent owner, taking account of the legitimate interests of third parties.

21 Carton M. Correa, et al, (Eds.), Intellectual Property and International Trade- The TRIPS Agreement, p. 210, Kluwer Law International, London, 1998

9

ii. Anti-competitive practices;iii. Public non commercial use;iv. Dependent patents

TRIPS does not limit the Members’ right to establish compulsory licenses on grounds other than explicitly mentioned therein, for instance, in order to protect the environment or for reasons of “public interest”. The Agreement gives that much flexibility to the Member countries and the only case in which the Agreement does restrict the freedom to determine the grounds for compulsory licenses relates to “semi-conductor technology” which can only be subject to compulsory license for non-commercial use and to remedy anti competitive practices.

In cases of emergency and extreme urgency, prior request to the patentee for grant of license on reasonable terms is not necessary. However, the patent holder has to be informed as soon as reasonably possible. Article 31(g) provides for revocation of the compulsory license as soon as the purpose for which it was issued has been fulfilled. This is a discouraging clause to applicants of compulsory license as they will not be sure as when their license can be revoked and in many cases their investment and labor might go in waste.

A glance of TRIPS Agreement and harmonious reading depicts that it incorporates conditions etc. under which a patented product may be used to protect public health by means of ‘other uses’ exception, that is to say by way of compulsory licensing.

The underlying objective of the patent rights is to contribute to the promotion of the technological innovation and to the transfer and dissemination of technology, to the mutual advantage of producers and users of technological knowledge and in a manner conducive to social and economic welfare, and to balance of rights and obligations. Therefore, the IPRs are subject to higher social values and a balance needs to be created. Article 8 of the Agreement states:-

22 Grant of patent is subject to certain conditions also apart from these grounds. The applications are considered on case by case basis upon fulfillment of prior request, determination of scope and duration, non-exclusive and non- assignable nature, remuneration, review and revisions etc.

10

1. Members may, in formulating or amending their national laws and regulations, adopt measures necessary to protect the public interest in sectors of vital importance to their socio- economic and technological development, provided that such measures are consistent with the provisions of this Agreement.

2. Appropriate measures, provided that they are consistent with the provisions of this Agreement, may be needed to prevent the abuse of intellectual property rights by right holders or resort to practices which unreasonably restrain trade or adversely affect the international transfer of technology.

The grant of compulsory licensing can be justified on the basis of this Article itself. It allows for appropriate measures to be taken to prevent abuse of IPRs. Secondly, it also allows the measures to be taken, which are necessary to protect public health and nutrition. On the ground of clause 1 of Article 8, grant of compulsory licensing can be justified in cases of pharmaceutical industry and other areas related to health and nutrition. This Article read with Preamble23 can be of great significance to the developing countries where the technological development is slow 23 The Preamble reads as :- Members,

    Desiring to reduce distortions and impediments to international trade, and taking into account the need to promote effective and adequate protection of intellectual property rights, and to ensure that measures and procedures to enforce intellectual property rights do not themselves become barriers to legitimate trade;

    Recognizing, to this end, the need for new rules and disciplines concerning:

    (a) the applicability of the basic principles of GATT 1994 and of relevant international intellectual property agreements or conventions;

    (b) the provision of adequate standards and principles concerning the availability, scope and use of trade-related intellectual property rights;

    (c) the provision of effective and appropriate means for the enforcement of trade-related intellectual property rights, taking into account differences in national legal systems;

    (d) the provision of effective and expeditious procedures for the multilateral prevention and settlement of disputes between governments; and

    (e) transitional arrangements aiming at the fullest participation in the results of the negotiations;

11

and use of the patented invention is necessary for protecting public health, environment or any other public interest.

Despite these overtures of TRIPS, confusion / suspicion surrounded for its impact on availability of essential drugs and their pricing which were addressed at Doha.

Doha Declaration and Compulsory Licensing

The Doha Declaration 2001 was the result of the uncertainties prevailing amongst the developing and least developed countries regarding applicability of TRIPS provisions and their impact on pharmaceutical industry.24 It was feared that product patent would affect access to medicines. Challenge of the decision legitimizing the production of generic versions of ARV (a medicine for AIDS) through compulsory licenses as a means to address the problem of access by multinational pharmaceutical companies in the country’s courts of the South African governments; was an aggravating factor leading to uncertainties regarding how TRIPS flexibilities would be interpreted. This action

    Recognizing the need for a multilateral framework of principles, rules and disciplines dealing with international trade in counterfeit goods;

    Recognizing that intellectual property rights are private rights;

    Recognizing the underlying public policy objectives of national systems for the protection of intellectual property, including developmental and technological objectives;

    Recognizing also the special needs of the least-developed country Members in respect of maximum flexibility in the domestic implementation of laws and regulations in order to enable them to create a sound and viable technological base;

    Emphasizing the importance of reducing tensions by reaching strengthened commitments to resolve disputes on trade-related intellectual property issues through multilateral procedures;

    Desiring to establish a mutually supportive relationship between the WTO and the World Intellectual Property Organization (referred to in this Agreement as “WIPO”) as well as other relevant international organizations; Hereby agree as follows

Articles……………

24 Supra Note 1812

of MNCs drew widespread criticism from both NGOs and governments of developing countries, who alleged that TRIPS was being used by the pharmaceutical industry to enhance profits at the cost of human lives.25

The controversy ultimately led to the withdrawal of the case and catalyzed a much-needed discussion on public health and intellectual property rights at the WTO’s Doha round of discussions in 2001, which culminated in a landmark declaration on public health known as the Doha Declaration on Public Health.26

The developing countries were not utilizing the flexibility of the TRIPS Agreement as they had been unsure of how these TRIPS flexibilities would be interpreted, and how far their right to use them would be respected.27

Protection of public health is one of the most important concerns and against the aforesaid background, the African group, later joined by India and Brazil, requested for a special session of WTO which was accepted and was held at Doha on 14th November, 2001, at the WTO Ministerial meeting in Doha. This Meeting

25 Carlos Correa, “Implications of Doha Declaration on the TRIPS Agreement and Public Health” as quoted by Vishwas H Devaiah , TRIPS and Public Health accessed from the INTERNET on 02/02/2008 on the address :- http://www.sarai.net/research/knowledge-culture/critical-public-legal-resources/tripsandpublichealth.pdf 26 Doha Declaration was adopted on 14th November 2001. Paragraphs 5 and 6 of the Declaration become more important. Paragraph 5 (b) states that each member has the right to grant compulsory licenses and the freedom to determine the grounds upon which such licenses are granted. Further clause (c) of Paragraph 5 states that each member has the right to determine what constitutes a national emergency or other circumstances of extreme urgency, it being understood that public health crisis, including those relating to HIV/AIDS, tuberculosis, malaria and other epidemics, can represent a national emergency or other circumstances of extreme urgency. Paragraph 6 states and declares 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 and therefore, Council for TRIPS was instructed to find an expeditious solution to this problem and to resort to the General Council before the end of 2002. The decision came on 30th August, 2003 which allowed any member country to export pharmaceutical products made under CL within the terms set out in the decision. (See www.wto.org/nglish/news_e/nes07_e/trips_wp_7dec07_e.htm and also www. wto.org/English/tratop_e/implem_para6_e.htm)27 “TRIPS and Pharmaceutical Patents”, FACT SHEET, September 2006 available on website at www.tripsfactsheet_pharma_2006_e accessed on 06/12/2008

13

clarified international trade rules cannot undermine the legitimate right of countries to protect public health.28

The need for such an endeavor was felt in view of the increasing disparity amongst nations in availability of life saving medicines. Despite medical advancement and increasing life expectancy, the disparity in health status amongst people worldwide is increasing. This is because of the reason that the drugs, which are available in the market are beyond reach of the poor.

The Doha Declaration on the TRIPS Agreement and Public Health recognized that developing countries with insufficient, or no manufacturing capacity in the pharmaceutical sector could face difficulties in making effective use of compulsory licensing under the TRIPS Agreement.

The Declaration29 has addressed these concerns30 and developing countries’ point of view has been conceded.

The objective of Doha Declaration on the TRIPS Agreement and Public Health was to clarify the official stand on certain provisions of TRIPS relating to public health. It recognizes the concerns of developing countries and LDCs on the issue. The Declaration clarifies that ‘public health crisis’ can represent ‘a national emergency or other circumstances of extreme urgency’, and that an ‘emergency’ may be either a short-term problem, or a long-lasting situation.31 28 “Public Health Safeguards in the TRIPS Agreement”, 19 as accessed on 8 th

October, 2009 and available on website:- www.whoindia.org/LinkFiles/Trade_Agreement_sections2_public_health_safeguards.pdf 29 The WTO has taken action by setting up a system for the implementation of Paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public Health after a decision on August 30, 2003 to facilitate access to medicines in developing countries. WTO members have incorporated the waiver of 2003 on 6th December 2005 into a permanent amendment on TRIPS. The permanent amendment shall allow any member country to export pharmaceutical products made under compulsory license. This shall make it easier for poorer countries to obtain cheaper generic versions of patented medicines. This amendment has to be ratified by 2/3 members for which the time has been extended to 31st

December 2009. [See N. Lalitha, “Doha Declaration and Public Health Issues”; Journal of Intellectual Property Rights, Vol. 13, September 2008, 401(406)] 30 Supra Note 27.31 Supra Note 25

14

The Doha Declaration recognizes the implicit imprints of Article 732 and 8 of the TRIPS Agreement that consideration of public good could be an overriding factor while offering IPR protection to medicines for specified diseases and epidemics, particularly for Developing and Least Developing countries and it does not come under the purview of WTO or the Dispute Settlement Body. It has to be kept in mind that Article 5 of the Agreement provides that any interpretation of the provisions of the Agreement has to be in compliance to the aims and objectives of the Agreement.

The Declaration, in fact, is the reiteration of the fundamental tenets already built in the 1994 Agreement on TRIPS and it endorsed more emphatically the following points:-33

(a) Need for TRIPS to address the public health problems affecting the Developing Countries and the Least Developing Countries especially for HIV/AIDS, Tuberculosis, Malaria and other epidemics.

(b)Recognition of the importance of intellectual property rights protection for innovation of new medicines while at the same time recognizing the unaffordable high prices of patented drugs.

(c) The rights of members to interpret and implement through appropriate measures protection of public health and promotion of access to medicines subject to respecting Articles 3 and 4 of the TRIPS Agreement, referring to Most Favored Nation treatment to national and non- nationals.

(d)The rights of members under Para 5 of the Declaration to determine the grounds for Compulsory Licenses define national emergencies and implement exhaustion rights.

(e) Methodology to assist countries with no technological capabilities to implement compulsory licensing to be addressed by General Council by the end of year 2002.

32 Article 7 read as :- Objectives :- The protection and enforcement of intellectual property rights should contribute to the promotion of technological innovation and to the transfer and dissemination of technology, to the mutual advantage of producers and users of technological knowledge and in a manner conducive to social and economic welfare, and to a balance of rights and obligations.33 Ramnath Subbu, “TRIPS and Public Health: the Doha Declaration,”, Business/Science, The Hindu, Thursday, November 29, 2001

15

(f) Provisions for technology transfer to Least Developed Countries under Article 66.2 to continue and the LDCs not obliged to implement Articles 5 and 7 of Part II of the Agreement till January 2016.

The Doha Declaration recognizes the fact which was implicit under Article 7 and 8 of TRIPS, that consideration of public good which includes public health could be the overriding factor while offering IPR protection for medicines for specified diseases and epidemics, particularly for developing and developed countries. The term ‘epidemic’ has not been defined and it gives a room for interpretation to the developing countries and it does not come under the purview of WTO or the Dispute Settlement Body. However, the beneficial mechanism for transfer of technology for making life saving medicines to developing countries and least developed countries is yet to be considered.

The Declaration confirms that its members can decide their own grounds for application of the flexibilities. CLs can be granted on large number of grounds related to public health concerns, and countries have the freedom to define these.34

Conclusion

Compulsory Licensing provisions have now become explicit after the Doha Declaration and Decision on Implementation of Paragraph 6 of Doha. CL has been agreed by the international community to be acceptable under TRIPS regime extending utmost importance to public health concerns. Such an approach of the international community has provided access to patented life saving medicines in the Developing and Least Developed Countries.

The Amendments brought to Indian Law of Patents in compliance of TRIPS too has taken into account the public health concerns by retaining CL provisions. The new amended Act allows export of drugs manufactured under CL to the poorer countries to meet their health problems as per the Doha Declaration on TRIPS.

34Supra Note 28.16

There are certain lacunas too in the current regime of CL in India such as non awarding CL for first three years of patent, permissibility only for the drugs registered in the country etc which should be resolved for achieving the objective of CL in a better manner. Even though, it may be stated that the new law will generate awareness and encourage companies to invest in research and inventions.

Lastly, it appears necessary to state that CL should not override the other important aspect that a company/firm/individual incurs lots of expenditure, time and energy for an invention and he has to be provided adequate incentive too. Therefore, the National Governments must properly look into the remuneration/royalty being paid to the patent holder in case of grant of CL and it should issue license in case of need and urgency. It must not be a normal feature, else, it shall have dissuasive effect for the innovators and in long term, the public interest of protecting public health shall be adversely affected. A balance must be maintained between both the interests.

Simultaneously, the Competition law also has to be taken into account while dealing with rights of patent holder and he must not be allowed to exploit his monopoly and dominant position.35 The CL acts as a balancing factor in restraining patent holders to turn monopolists and to harm public in general.

The CL may provide a temporary succor to the concerns of national health in emergency or in case of no access to drugs due to high prices, the long term solution can be found only by building capacity within the country to manufacture essential drugs. It shall need proper mechanism to ensure technology transfer and the Developing as well as Least Developed countries need to focus in this area.36 Apart from the efforts of technology transfer, the countries with no or insufficient manufacturing capacity should attempt and become innovative.

35 “Competition law and Intellectual Property Laws” as accessed on 27/11/2009 and available on Website:- www.legalserviceindia.com/article/1307-Competition-Law-and-Intellectual-Property-Laws.html 36 N.S Gopalkrishnan, “TRIPS Agreement and Public Health: An Overview of International Issues”; Journal of Intellectual Property Rights, Vol. 13, September 2008, 395 (398)

17

--------------------------------------------------------------------------------------

18