Compulsory licensing system is the core component of the patents system. The system refers to the practice by a government to authorise itself or the third parties to use the subject matter of a patent with or without the authorisation of the patent holder for reasons of public policy incorporated in the patents law of that government.
The system helps the enterprises other than the patent holders to play a competitive role by limiting the exclusive rights of the patentee in the domestic markets and to meet the export demands of other countries for the relevant patented products. Paris Convention, TRIPS Agreement and Doha Declaration on TRIPS and Public Health stipulate appropriate provisions on compulsory licensing for implementation by the member countries of the WTO in their national patents law.
There is hardly any developing country including India that have made full use of the stipulations in the three documents mentioned. This Paper deals with the various possibilities for ensuring the working of the patents under certain contingencies through compulsory licences granted by the concerned government authorities to meet the demands of the patented products, particularly in the area of health care needs. India in particular has ignored certain important flexibilities in the amending process of its National Patents Act 1970.
The stipulations on compulsory licensing in the three documents are explained hitherto :
Paris Convention was signed in 1883. It was mainly a club of the developed countries. At that time the term ?working of the patent? was not defined. Each member country was free to define the ?working? of the patents in their own national patents law. The 1925 amendments of the Paris Convention dealt with forfeiture of patent for non-working after a grace period of three years from the date of grant of patent. The last amended Paris Convention of 1967 in its Article 5-A dealt with the issue of compulsory licensing in an adequate manner. Article 5-A stipulates as follows:
?5A (2) Each country of the Union shall have the right to take legislative measures providing for the grant of compulsory licences to prevent the abuses which might result from the exercise of the exclusive rights conferred by the patent, for example, failure to work.
(4) A compulsory licence 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. Such a compulsory licence shall be non-exclusive and shall not be transferable, even in the form of the grant of a sub-licence, except with that part of the enterprise or goodwill which exploits such licence.?
The stipulations in the Paris Convention have become relevant even after the enforcement of TRIPS Agreement. Article 2 of TRIPS in Para 1 provides that:
?Members shall comply with Articles 1 through 12, and Article 19 of the Paris Convention (1967).?
The above stipulations in the Paris Convention will be used in this Paper for determining possibilities for grant of compulsory licences.
Article 31 of the TRIPS Agreement deals with ?Other use (of the patented subject matter) without authorization of the right holder?. Article 31 in its relevant subparagraphs stipulates as follows:
?Article 31: Where the law of a Member (Country) 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 a 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;
(f) any such use shall be authorized predominantly for the supply of the domestic market of the Member authorizing such use;
(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).?
(3) Article 8 of TRIPS on ?Principles? also stipulates that;
2. Appropriate measures, provided that they are consistent with the provisions of this (TRIPS) Agreement, may be needed to prevent the abuse of intellectual property rights by right holders or the resort to practices which unreasonably restrain trade or adversely affect the international transfer of technology.?
The above two important Articles of TRIPS can be used to determine possibilities for grant of compulsory licences. These Articles provide enough flexibilities for grant of compulsory licences by the concerned government authorities.
Doha Declaration of WTO on TRIPS and Public Health
The Doha Declaration of November 2001 is a landmark Declaration clarifying the rights of the Member countries in regard to the granting of compulsory licensing stipulations of the TRIPS Agreement. Relevant paragraphs of this Declaration are reproduced as follows:
?(4) We agree that the TRIPS Agreement does not and should not prevent Members from taking measures to protect public health. Accordingly, while reiterating our commitment to the TRIPS Agreement, we affirm that the Agreement can and 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.
(To be concluded)
(The writer retired as Commissioner of Payments. Presently he is Convener, National Working Group on Patent Law and Trustee & Secretary General of Centre for Study of Global Trade System & Development.)